FTSE 100 Dips as Healthcare and Energy Sectors Struggle, UK Wage Growth Slows
London's FTSE 100 fell 0.8% due to healthcare and energy sector declines. UK wage growth cooled to a two-year low, potentially influencing future Bank of England rate decisions. Precious metal miners saw significant gains.
On September 10, 2024, the FTSE 100, Britain's premier stock index, experienced a 0.8% decline, primarily driven by setbacks in the healthcare and energy sectors. This downturn came just a day after the index had recorded its most substantial single-day gain in over a month. In contrast, the FTSE 250, which represents mid-cap companies, maintained a steady position.
The pharmaceutical and biotechnology sector faced significant pressure, dropping 1.5% to its lowest point in more than a month. AstraZeneca, a key player in this sector, saw its shares fall by 2.4% following disappointing results from a crucial lung cancer drug trial. The trial outcomes, released on September 9, revealed that the company's experimental precision medication did not significantly enhance overall patient outcomes as anticipated.
Energy stocks also contributed to the market's decline, with the sector experiencing a 1.7% drop. This downturn was attributed to Brent crude futures falling below $70 per barrel, a level not seen since December 2021. The price decrease came in response to OPEC+'s downward revision of its demand forecast for 2024 and 2025.
The automobile and parts sector emerged as the day's poorest performer, declining by 2.9%, closely followed by a 1.9% decrease in the banking sector. These movements underscore the interconnected nature of various industries within the UK economy and their impact on the stock market.
In contrast to the general market trend, precious metal miners saw a remarkable 6.7% increase, marking their best performance since November 4, 2022. This surge was largely due to Centamin, whose shares skyrocketed by 22.9% following the announcement of a $2.5 billion acquisition offer from AngloGold Ashanti. This development highlights the ongoing consolidation trends within the global mining industry.
The UK's economic landscape also played a role in market movements. Data released on the same day indicated that British pay growth had cooled to a more than two-year low in the three months leading up to July 2024. This information, coupled with an increase in employment figures, has led economists to speculate that the Bank of England might be on track for an interest rate cut in November.
"The recent wage growth data and employment figures will be carefully considered in our upcoming policy decisions. We remain committed to maintaining price stability while supporting the economy."
Real estate and homebuilder indexes benefited from this economic data, as these sectors are particularly sensitive to interest rate changes. The potential for lower rates typically boosts activity in property-related industries.
Among individual stocks, Alpha Group experienced an 11.1% decline, placing it at the bottom of the FTSE 250 index. This drop followed the company's announcement of CEO succession plans, with Clive Kahn set to replace founder Morgan Tillbrook in January 2025.
IQE, a semiconductor wafer manufacturer, also faced significant challenges, with its shares plummeting by 19.2%. The company revealed that its annual performance was expected to be at the lower end of analysts' projections, reflecting ongoing challenges in the semiconductor industry.
As the markets continue to react to both global and domestic factors, investors remain vigilant, closely monitoring economic indicators and corporate performances for signs of future trends.
