FTSE rallies

The FTSE 100 has suddenly rallied a bit, having traded lower for most of the day. Rally seems to be being driven by retail stocks like Burberry and Frasers Group. Data from Hargreaves Lansdown:

One-in-three families in Britain have less than £1,000 in savings

From the Yahoo Finance UK desk today we have this:

Over 11 million people in Britain don’t have basic ‘rainy day’ savings of at least £1,000, as households with low savings are more likely to rely on credit cards, overdrafts, or borrowed money to meet daily expenses.

A report by the Resolution Foundation said that one-in-three working age families (11.2 million) don’t have basic level ‘rainy day’ savings of at least £1,000. This increases to almost half of low-income families as the cost of living crisis makes it even harder to save money for emergencies.

Some 12% revealed they had less than £100 and 5% did not have any savings at all.

Families with low savings were more than twice as likely to have used credit cards, overdrafts, or borrowed money from formal lenders in order to meet daily expenses compared to those with more than £1,000 of savings.

NatWest lagging

NatWest is among the biggest fallers in the FTSE 100 today ahead of its earnings release on Friday. It fell about 2% in morning trade in London as news broke that it is preparing to pay out about £350m in staff bonuses, according to Sky News.

The bank is predicted to report a pre-tax profit of £6bn for the year on Friday, with an income totalling £14.6bn, according to analysts' consensus from November.

The report comes after market jitters in October when the bank lowered its forecast net interest margin (NIM) for the year, causing its share price to drop.

FTSE falls slightly

The FTSE has fallen slightly in early trade. Here are the stocks weighing it down:

Rate cuts still in focus

Here's Neil Wilson from Finalto on what markets will be looking at this week:

Markets remain focused on when central banks will start to cut rates. That puts a lot of emphasis on Tuesday’s inflation data from the US. In December the CPI outstripped forecasts at 3.4% vs 3.2% anticipated, whilst the stickiness of core inflation remained evident as this came in at 3.9%, down marginally from 4.0% in November.

The data is key to the Fed’s decision on when to cut rates – last week’s services PMI prices index pointed to the resilience of inflation and the problems of the ‘Last Mile’; markets have been dialling back expectations for a March cut and it is possible the Fed could wait even longer.

Some sectors are hiring urgently

Also from CIPD, despite the tightness mentioned in the report some sectors are struggling to recruit:

As in previous Labour Market Outlook reports, healthcare (39%), education (34%), and public administration and other public sector (31%) are all anticipating significant problems in filling vacancies in the next six months at the highest rate.

Smaller pay rises on the horizon in 2024

Central bankers might be breathing a sigh of relief at a new report from Chartered Institute of Personnel and Development (CIPD) which shows UK employers planning meagre pay rises in 2024 — the lowest increases since the start of the pandemic.

Tightness in the labour market appears to have eased, and with that competition for staff has reduced meaning workers' case in pay negotiations is weaker. Employers are also choosing the shoulder the burden of higher wages in different ways.

Pay increases, which is one of the factors the Bank of England looks at when deciding how to set interest rates, have held at 5% for more than a year, but are expected to slip to 4% in 2024. The difference is evident across both the public and private sector, the report said.

Overnight in Asia

Chinese stocks have had a confusing run-up to the year of the dragon, with the Hang Seng (^HSI) having rallied and then tanked last week on news of government intervention in markets and a subsequent poor data release.

The Hang Seng finished 0.8% lower on Friday and has slipped 7.6% so far this calendar year on prolonged worries about China's stalling growth. Chinese markets were shut today for the Lunar new year holiday.

The Nikkei (^N225) in Japan rose a cautious 0.1%.

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8 champion homes in Olympic host cities

Signing off

US stocks still muted