<?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />UK Claimant Count (DEC) (9:30GMT; 4:30EST) <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Actual: -5.5K
Expected: -3.5K
Previous: -7.9KHow Did the Markets React? <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
<?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />UK claimant count showed that UK labor markets are tightening. The number printed at -5.5K versus -3.5K expected. Furthermore, the prior months figures were revised downward to -7.9K from -5.4K indicating that job growth should prove strong support for UK economy going forward. Currencies reacted best to the news as the employment data suggested that BoE will continue to raise short term rates as the year progresses. Bonds however rallied on the news preferring to focus on the more muted wage growth results which printed at 4.1% versus 4.2% expected. FT100 however was more affected by slumping miners ignoring the employment data.
Bonds 10-Year UK Gilts
Despite the seemingly hawkish inflation news of tight labor markets, bonds gained as the lower than expected wage growth led fixed income to believe that for the time being inflation remains el contained. UK Gilts were trading at 4.86% off 2 basis points in the day.
FX GBP/USD
GBP/USD performed best of all the majors in overnight trade as currency traders plowed into the unit clearing the 1.9650 barrier. The positive news from the labor markets suggest that BoE may sustain its tightening campaign for the foreseeable future as both job claims and wage growth indicate that UK economy continues to gather steam.
Equities FT 100
The UK equity markets for the most part ignored the UK labor data as they focused in individual stock stories. The U.K. FTSE 100 index dipped 0.1% at 6,210.00 as mining stocks such as Lonmin exerted pressure amid lower gold and copper
prices. Oil companies such as BP and Royal Dutch Shell also fell as oil prices continued to weaken. While airlines including British Airways advanced after Tuesday's sharp drop in oil prices. Shares of DSG International which sells electrical products in the U.K. and Europe, declined 10.4% as investors took a look at lower first-half earnings and an accompanying Christmas trading statement for clues on recent performance.
