Federal Reserve ease concerns for now, with eyes turning to Friday’s jobs report

• FTSE 100 continues to outperform.

• Federal Reserve ease concerns for now, with eyes turning to Friday’s jobs report.

• OECD estimates highlight concerning UK growth outlook.

The FTSE 100 once again rules the roost in Europe, with mainland European markets returning to action with a largely downbeat tone this morning. Financials and commodity-focused stocks remain at the forefront of the FTSE’s push higher, with Standard Chartered standing out as the morning’s big outperformer thanks to a healthy 6% gain for the Asia-focused bank. While markets have spent much of their time concerned over the implications of a higher for longer approach to interest rates, today’s Standard Chartered earnings serve to highlight the potential benefits for those financial institutions whose businesses have benefitted from improved margins.

Today’s somewhat indecisive start in Europe has highlighted the mixed feelings around yesterday’s FOMC interest rate decision, with Jerome Powell treading a fine line given the recent uptick in inflation pressures. The past month saw market expectations for the first Fed rate cut pushed from June to December, although Powell managed to moderately lift hopes of an earlier shift in November. All eyes turn to Friday’s US jobs report, with the average earnings figure expected to remain at a concerning 4.1%. With the quarterly employment cost index having surged to a lofty 1.2% this week, there is a distinct risk that we could similarly see average earnings strengthen to throw another curveball in the direction of the Fed.

The latest OECD growth estimates will have made for uncomfortable reading at 10 Downing Street, with the UK predicted to grow at a measly 0.4% this year. That downgrade saw growth prospects revised down from an already underwhelming 0.7% forecast in November, highlighting the detrimental impact of price pressures in the services sector and elevated wage growth throughout the economy. With inflation pressures rearing their head once again over recent months, there is a feeling that governments will remain constrained in their ability to implement growth-led spending plans that might help boost the outlook for growth over the near-term.