London close: Stocks manage gains as unemployment rises

14th May 2024 16:40

(Sharecast News) - London stocks closed higher on Tuesday, as investors analysed the latest UK jobs data and remarks from Bank of England chief economist Huw Pill.

The FTSE 100 index rose 0.16% to reach 8,428.13 points, while the FTSE 250 index gained 0.28%, closing at 20,618.52 points.

In currency markets, sterling was last up 0.22% on the dollar to trade at $1.2587, while it weakened 0.03% against the euro, last changing hands at €1.1635.

"Equity markets within Europe look to be following the theme set within yesterday's US session, as risk assets continue to tread water ahead of the critical inflation data due today and tomorrow," said Scope Markets chief market analyst Joshua Mahony earlier.

"The FTSE 100 provides one bright spot within an otherwise downbeat session in Europe, with Vodafone and Ocado the two dominant gainers in early trade.

"Recent speculation over a potential BHP takeover for UK-listed Anglo American has hit the buffers, with yesterday's second bid rejection now followed up by news that the company could seek to sell off part of its business to ward off suitors."

Mahony said the decision to spin off its diamond, platinum, and coal mining operations would see a greater focus on copper.

"With copper rising into a fresh two-year high this morning, there is a clear surge in demand for this key material as the world progressively moves towards increased electrification.

"For UK investors, the news that Anglo may manage to remain on the FTSE 100 comes as a welcome development, with recent gains in the index helping to slightly ease the perception that the UK market undervalues its businesses."

UK unemployment rises, Huw Pill flags summer rate cut

In economic news, fresh official data in the UK showed unemployment inching higher, as expected, with the Office for National Statistics reporting a rate of 4.3% in January to March, up from 4.2% previously.

The claimant count also rose in April by 8,900 on the month, reaching 1.58 million.

Although the number of payrolled employees fell by 5,000 between February and March, it increased by 288,000 year-on-year.

However, the early estimate for payrolled employees in April decreased by 85,000 on the month.

Despite the figures, average earnings saw an increase, with annual growth in employees' average regular earnings reaching 6% in January to March, exceeding analysts' expectations.

"While the further easing in regular private sector pay in March suggests that wage pressures faded a bit faster than the BoE expected, broader measures of wage growth are probably still a bit too strong from the Bank's liking," said Ashley Webb, UK economist at Capital Economics.

"At the margin, this may make the BoE a bit more uneasy about first cutting interest rates in June."

Elsewhere, the Bank of England's chief economist, Huw Pill, indicated a potential interest-rate cut this summer, noting a possible easing of the tightness in the UK labour market.

Speaking at an event on Tuesday, Pill suggested that a rate cut could be under consideration, although he emphasised the importance of maintaining some level of restriction in the system.

The Bank Rate has remained at 5.25% since August last year, with recent data suggesting progress in bringing inflation down to the 2% target.

Across the Atlantic, US producer prices rebounded more than expected in April, with the Bureau of Labor Statistics reporting a 0.5% increase over the month, compared to a downwardly revised fall of 0.1% in March.

That rise was ahead of economists' expectations, driven largely by an increase in the index for final demand services.

However, small business optimism in the US remained subdued, according to the National Federation of Independent Business.

While optimism increased slightly in April, it still lags significantly behind the long-term average, reflecting ongoing concerns about inflation and economic uncertainty.

Vodafone in the green, DCC slips on results

On London's equity markets, Vodafone Group jumped 4.86% after reporting annual results slightly above forecasts.

The telecoms giant's operating profit fell 74.6%, primarily due to disposals in the prior financial year.

Burberry Group rose 2.44% ahead of its preliminary results announcement scheduled for Wednesday.

Electricals retailer Currys saw an 8.8% surge as it raised full-year profit expectations, citing a return to like-for-like sales growth.

Online electricals retailer AO World and car dealership Inchcape also recorded strong gains, with increases of 5.2% and 6.75%, respectively.

Logistics real estate investor Tritax EuroBox announced the sale of a Gothenburg warehouse, leading to a rise of 5.93%.

On the downside, DCC declined 2.03% after its full-year revenue and adjusted earnings per share missed analysts' forecasts.

Flutter Entertainment also lost ground, dropping by 2.13%, after it reported widened net losses in the first quarter.

Bakery chain Greggs fell 1.49%, maintaining full-year earnings forecasts despite a challenging market.

Anglo American experienced a notable decline of 3.49% after it announced significant changes to its business structure, including divestments and spin-offs.

Bank of Georgia Group shares fell by 3.72% amid ongoing protests in the country over the introduction of a new "foreign agents" law.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,428.13 0.16%

FTSE 250 (MCX) 20,618.52 0.28%

techMARK (TASX) 4,746.00 0.26%

FTSE 100 - Risers

Ocado Group (OCDO) 369.80p 8.13%

Vodafone Group (VOD) 73.28p 4.72%

Glencore (GLEN) 492.50p 3.60%

BT Group (BT.A) 112.20p 2.98%

St James's Place (STJ) 496.60p 2.39%

Rightmove (RMV) 547.80p 2.35%

Burberry Group (BRBY) 1,188.50p 2.02%

SSE (SSE) 1,834.00p 1.89%

Severn Trent (SVT) 2,628.00p 1.74%

Schroders (SDR) 375.60p 1.68%

FTSE 100 - Fallers

Anglo American (AAL) 2,619.50p -3.23%

DCC (CDI) (DCC) 5,770.00p -2.29%

Flutter Entertainment (DI) (FLTR) 15,875.00p -1.95%

International Consolidated Airlines Group SA (CDI) (IAG) 184.10p -1.26%

Shell (SHEL) 2,901.00p -1.23%

InterContinental Hotels Group (IHG) 7,854.00p -1.08%

Phoenix Group Holdings (PHNX) 504.50p -0.79%

Unite Group (UTG) 951.00p -0.68%

B&M European Value Retail S.A. (DI) (BME) 548.60p -0.62%

AstraZeneca (AZN) 12,246.00p -0.58%

FTSE 250 - Risers

Currys (CURY) 70.50p 7.88%

Tritax Eurobox (GBP) (EBOX) 62.50p 5.93%

AO World (AO.) 109.20p 5.20%

Clarkson (CKN) 4,075.00p 4.49%

Bakkavor Group (BAKK) 126.00p 4.13%

Inchcape (INCH) 811.00p 3.64%

Trustpilot Group (TRST) 216.50p 3.59%

Ferrexpo (FXPO) 48.20p 3.43%

Mobico Group (MCG) 65.90p 3.37%

Babcock International Group (BAB) 519.50p 3.08%

FTSE 250 - Fallers

Bank of Georgia Group (BGEO) 4,720.00p -5.03%

CMC Markets (CMCX) 259.50p -4.60%

International Distributions Services (IDS) 271.40p -4.37%

Syncona Limited NPV (SYNC) 115.00p -3.52%

TBC Bank Group (TBCG) 2,950.00p -3.44%

Close Brothers Group (CBG) 486.00p -2.76%

Marshalls (MSLH) 307.50p -2.38%

Hammerson (HMSO) 28.10p -2.29%

Indivior (INDV) 1,406.00p -2.23%

Paragon Banking Group (PAG) 718.50p -1.98%