London close: Stocks rise as UK wage growth moderates

12th Mar 2024 16:17

(Sharecast News) - London markets closed with gains on Tuesday, buoyed by hopes for interest rate cuts following a modest increase in UK wage growth.

The FTSE 100 rose 1.02% to 7,747.81 points, while the FTSE 250 saw a more moderate increase of 0.18%, closing at 19,565.21.

In currency markets, sterling was last down 0.28% on the dollar to trade at $1.2778, while it decreased 0.21% against the euro, changing hands at €1.1704.

"Signs that UK wage growth is easing, along with rising unemployment, combined with a higher dollar to drive GBP-USD back from a seven-month high today," said IG chief market analyst Chris Beauchamp.

"The odds of an earlier Bank of England rate cut have risen, which should at least mean UK-focused stocks might see further inflows to help bolster their disappointing performance so far this year."

Beauchamp quipped that it "would have taken a brave soul" to suggest stocks would do well on Tuesday even after a higher US inflation print, but that is what happened in afternoon trading.

"Despite signs of broadening price growth, investors do not appear to be unduly worried that the Fed will have to scale back its plans to cut rates.

"But should inflation continue on its current path, and the rhetoric turn to more possible rate hikes, then we could see the mood shift."

UK wage growth moderates, US inflation still above expectations

In economic news, UK wage growth moderated in the three months to January, according to fresh data from the Office for National Statistics.

Average regular pay growth, excluding bonuses, dipped slightly to 6.1%, marking the slowest increase in over a year but aligning with expectations.

Concurrently, real regular wages, factoring in consumer price inflation, saw an uptick to 2%, reaching the highest level since the summer of 2019.

However, the unemployment rate inched up to 3.9% during the same period, contrary to expectations of remaining stable.

Additionally, the number of vacancies declined to a 32-month low.

"Recent trends in the jobs market are continuing, with earnings, in cash terms, growing more slowly than recently but, thanks to lower inflation, real-terms pay continues to increase," said ONS director of economist statistics Liz McKeown.

"The number of job vacancies has also been falling for coming up to two years, though the total remains more than 100,000 above its pre-pandemic level.

"Over the last year, there was little change in the proportions of people who are employed, unemployed or neither working nor looking for work, though the overall number of people in work is still rising."

Across the pond, the US saw minimal movement in the cost of living in February, defying predictions of a downturn primarily due to escalating energy costs.

Headline consumer prices rose 0.4% on a month-on-month basis, pushing the year-on-year rate to 3.2%.

Core CPI also saw a similar uptick of 0.4%, with an annual increase of 3.8%.

Rising energy prices contributed to the upsurge in headline CPI, while certain sectors like used cars and apparel experienced notable price hikes.

Meanwhile, US small business optimism unexpectedly waned last month, according to the National Federation of Independent Business (NFIB).

Despite a recent easing in price pressures, inflation remained a persistent concern for many firms.

The NFIB Small Business Optimism Index dropped to 89.4 in February, missing analysts' projections and continuing a trend of subdued sentiment for the 26th consecutive month below the 50-year average reading.

On the continent, Germany's secondary reading of inflation confirmed a downward trend, with consumer price increases easing to a 32-month low in February.

The harmonised index of consumer prices recorded a year-on-year rate of 2.5%, down from 2.9% in January, primarily attributed to a slowdown in food-price growth.

That data aligned with earlier projections, highlighting the lowest inflation rate since June 2021.

TP ICAP jumps, vet firms fall on CMA announcement

On London's equity markets, TP ICAP Group jumped 10.07% after announcing better-than-expected full-year profits.

The interdealer broker also revealed plans for a £30m share buyback and hinted at potential options, including a minority stake IPO, for its data business Parameta Solutions.

Ladbrokes owner Entain saw a 3.2% increase following reports it was considering a sale of PartyPoker.

Industry sources indicated that the online poker business could fetch around £150m, as Entain aimed to strengthen its core operations amidst activist investor pressure.

British American Tobacco added 2.05% as it confirmed it was divesting a portion of its stake in Indian tobacco firm ITC.

Shares in cybersecurity group Darktrace continued to climb, gaining 4.38% after Deutsche Numis reiterated its 'buy' rating and maintained a target price of 520p.

It followed Darktrace's recent positive performance and upgraded full-year forecasts.

On the downside, housebuilder Persimmon declined 3.67% after it warned of challenging markets and reported a 52% decrease in full-year profits, falling short of estimates.

Domino's Pizza Group dropped 5.31%, despite reporting increased profit, cash flow, and shareholder returns in 2023.

The company highlighted a significant fourth quarter slowdown.

Pets at Home Group lost 3.56% following news of a potential formal market investigation by the UK's Competition and Markets Authority.

The investigation stemmed from concerns over the veterinary industry's pricing practices, with AIM-listed CVS Group also in the red.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,747.81 1.02%

FTSE 250 (MCX) 19,565.21 0.18%

techMARK (TASX) 4,535.32 0.51%

FTSE 100 - Risers

Entain (ENT) 762.40p 3.76%

Beazley (BEZ) 669.50p 3.64%

JD Sports Fashion (JD.) 117.90p 3.24%

Prudential (PRU) 812.40p 3.07%

HSBC Holdings (HSBA) 592.60p 2.92%

InterContinental Hotels Group (IHG) 8,390.00p 2.91%

Smurfit Kappa Group (CDI) (SKG) 3,426.00p 2.57%

Smiths Group (SMIN) 1,652.00p 2.51%

Intermediate Capital Group (ICP) 1,999.50p 2.51%

Rolls-Royce Holdings (RR.) 391.80p 2.24%

FTSE 100 - Fallers

Persimmon (PSN) 1,324.00p -3.67%

Severn Trent (SVT) 2,551.00p -2.30%

SSE (SSE) 1,582.00p -1.92%

Centrica (CNA) 128.30p -1.77%

National Grid (NG.) 1,036.00p -1.75%

Mondi (MNDI) 1,329.00p -1.52%

St James's Place (STJ) 447.60p -1.34%

United Utilities Group (UU.) 1,041.00p -1.28%

SEGRO (SGRO) 880.60p -1.26%

Croda International (CRDA) 4,681.00p -1.24%

FTSE 250 - Risers

TP Icap Group (TCAP) 218.60p 10.07%

Ferrexpo (FXPO) 55.00p 7.00%

Quilter (QLT) 103.50p 6.48%

Future (FUTR) 613.50p 5.32%

Darktrace (DARK) 455.30p 4.38%

Lancashire Holdings Limited (LRE) 657.50p 3.71%

Bridgepoint Group (Reg S) (BPT) 269.80p 2.90%

Games Workshop Group (GAW) 9,995.00p 2.78%

Aston Martin Lagonda Global Holdings (AML) 168.70p 2.76%

Hammerson (HMSO) 26.10p 2.76%

FTSE 250 - Fallers

PZ Cussons (PZC) 89.00p -6.32%

International Distributions Services (IDS) 225.50p -5.69%

Domino's Pizza Group (DOM) 360.00p -3.59%

Pets at Home Group (PETS) 265.40p -3.56%

Pennon Group (PNN) 679.00p -3.21%

Mobico Group (MCG) 72.70p -3.07%

NB Private Equity Partners Ltd. (NBPE) 1,642.00p -2.84%

Baltic Classifieds Group (BCG) 229.50p -2.55%

Drax Group (DRX) 480.20p -2.53%

Wizz Air Holdings (WIZZ) 2,282.00p -2.40%