Share prices in London rose at the open on Tuesday, and the FTSE 100 continued to set new record highs, after figures on UK employment and wages showed a still-very-strong jobs market.
The FTSE 100 index opened up 30.24 points, or 0.4%, at 7,978.00. The equity benchmark hit a new intraday high of 7,986.20 points in early morning trade.
The FTSE 250 was up 50.17 points, or 0.3%, at 20,174.69, and the AIM All-Share was up 1.60 points, or 0.2%, at 872.71.
The Cboe UK 100 was up 0.4% at 798.19, the Cboe UK 250 was up 0.3% at 17,584.48, and the Cboe Small Companies was up 0.4% at 13,986.34.
The unemployment rate was 3.7% in the UK in the three months from October to December, unchanged from the September to November period and in line with market consensus cited by FXStreet.
Annual growth in average total pay, including bonuses, was 5.9%. Excluding bonuses, it was 6.7%. In September to November, annual growth in average total pay, including bonuses, and in regular pay, excluding bonuses, both were 6.4%.
This means pay continued to lag inflation in the UK. Consumer prices rose by 10.5% in December from a year before.
The ONS said that growth in total and regular pay fell in real terms annually in October to December, by 3.1% for total pay and 2.5% for regular pay, when adjusted for inflation.
This is smaller than the record fall in real total pay in February to April 2009 of 4.5%, the ONS noted, but still remained among the largest falls in growth since comparable records began in 2001.
Economists at ING said, with UK wage growth coming in higher than expected, the latest jobs report will be a concern for Bank of England hawks.
‘In short, there’s little sign that wage growth is slowing, as some recent surveys have suggested. And the rest of the report shows the jobs market in reasonable health too,’ they said.
‘Today’s data is one of a few key releases the Bank of England will be watching ahead of its March meeting, and so far the dial is pointing towards a 25 basis point rate hike.’
The Bank of England’s next interest rate decision is on March 23.
The pound was quoted at $1.2140 at early on Tuesday in London, higher compared to $1.2133 at the close on Monday.
In London, Coca-Cola HBC was the best blue-chip performer in early morning trade, rising 4.0%.
The soft-drink bottling company reported a strong year of organic growth, saying this was against a challenging backdrop, achieving record revenue in 2022 of €9.20 billion. This represented growth of 28% from €7.17 billion the previous year.
Coca-Cola HBC posted pretax profit of €623.6 million, down from £734.9 million, however. The company said this was mainly due to impairment charges relating to its operations in Russia.
Looking forward to 2023, Coca-Cola HBC said it expects to generate organic revenue growth above its 5% to 6% target range but cautioned that it remains ‘attentive’ to macroeconomic and geopolitical risk.
Flutter Entertainment rose 3.1% as it mulled an additional US listing.
The Paddy Power-owned said it intends to consult its shareholders extensively before putting forward a formal resolution for approval.
‘In the event that there is broad shareholder support for an additional US listing, this would take precedence over any plans to list a small shareholding in FanDuel,’ it said.
Dublin-based Flutter explained that Fan Duel, its New York-based sports betting arm, is becoming the company’s largest business by revenue.
‘Overall, we view this proposal positively,’ commented Davy Research. ‘If successful, it will bestow virtues such as giving it greater access to deeper capital markets and new US domestic investors as well as enhancing liquidity. Furthermore, it would raise its overall profile in its biggest market.’
Vodafone was up 0.8%. Liberty Global late on Monday said it acquired a 4.9% stake in telecommunications firm, believing it to be undervalued.
Liberty Global bought 1.33 billion shares in Vodafone and will fund the investment through a non-recourse financing. It said it required equity funding of £225 million. At current market prices, the stake purchased by Liberty Global is worth £1.22 billion.
In the FTSE 250, Tui climbed 1.7% as its loss in the financial quarter that ended December 31 narrowed, amid a climb in revenue on the back of higher travel demand, helped by eased Covid restrictions.
The Hanover, Germany-based holiday operator reported a pretax loss of €272.6 million, narrowed by 33% from €404.5 million a year ago. Revenue jumped 58% to €3.75 billion from €2.37 billion.
Travel peer easyJet rose 2.6% in a positive read-across, which was boosted further by Deutsche Bank raising the budget airline to ’buy’ from ’sell’.
In European equities on Tuesday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both up 0.1%.
The euro stood at $1.0731 early on Tuesday, higher against $1.0718 at the London equities close on Monday. The dollar was softer ahead of the latest inflation print for the US, due at 1330 GMT.
Markets expect to see consumer price inflation to stand at 6.2% in January, according to FXStreet, down from 6.5% in December.
Tuesday’s US inflation data is expected to be an important influence on the future moves of the US Federal Reserve, with markets currently expecting a 25 basis point hike from the central bank at its next meeting in March.
‘Overall, the data seems set to be consistent with US Federal Reserve Chair Powell’s recent cautionary comments that the disinflationary process is likely to be bumpy,’ said Lloyds Bank. ‘The several Fed policymakers who are due to speak today are expected to reiterate the message that US interest rates have further to rise. ’
In the US on Monday, Wall Street ended higher. The Dow Jones Industrial Average closed up 1.1%, the S&P 500 up 1.1% and the Nasdaq Composite up 1.4%.
Against the yen, the dollar was trading at JP¥132.09, lower compared to JP¥132.77. Economics professor Kazuo Ueda was nominated on Tuesday as the Bank of Japan’s next governor.
The respected economist, described as careful and cautious, was a surprise pick for the change of guard after the outgoing governor’s deputy reportedly turned down the job.
In addition on Tuesday, government data showed Japan’s economy expanded just 0.2% in the last quarter of 2022, a smaller rebound than expected despite the long-awaited reopening of the country to tourists.
The Nikkei 225 index in Tokyo closed up 0.6% on Tuesday.
Elsewhere in Asia-Pacific, the Shanghai Composite closed up 0.3%, while the Hang Seng index in Hong Kong closed down 0.2%. The S&P/ASX 200 in Sydney closed up 0.2%.
Brent oil was quoted at $86.20 a barrel at early in London on Tuesday, up from $85.82 late Monday. Gold was priced at $1,859.56 an ounce, higher against $1,853.05.
Still to come in Tuesday’s economic calendar, other than the US inflation report, there is EU employment data and a gross domestic product estimate for the single-currency area at 1000 GMT.
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