Stock prices in London were mixed on Tuesday morning as new data showed UK wage growth eased in the three months to August, after Chancellor Rachel Reeves on Monday warned her budget will be ‘tough’.
The FTSE 100 index opened down 9.83 points, or 0.1%, at 8,282.13. The FTSE 250 was up 31.91 points, or 0.2%, at 20,849.10, and the AIM All-Share was up just 0.28 points at 734.05.
The Cboe UK 100 was stable at 829.48, the Cboe UK 250 was up 0.3% at 18,300.61, and the Cboe Small Companies was down 0.8% at 10,545.37.
According to the Office for National Statistics, the jobless rate faded to 4.0% in the three months to August, from 4.1% in the three months to July. The latest figure compared to FXStreet-cited consensus of 4.1%.
Wage growth eased.
Averages earnings excluding bonuses rose 4.9% in the three months to August, cooling from 5.1% in the three months to July. Annual growth in total earnings, so including bonuses, was 3.8%. Growth in earnings including bonuses eased from 4.0% in three months to July.
Separate estimates indicated the number of payrolled employees rose by 0.4% in September, when compared with the same month a year prior. Provisional figures indicate that median monthly pay increased by 5.3% in September when compared with a year prior.
In European equities on Tuesday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was up 0.7%.
The pound was quoted at $1.3050 early on Tuesday in London, down compared to $1.3052 at the equities close on Monday.
Rachel Reeves warned her budget on October 30 would be ‘tough’ as she gave the clearest signal yet that businesses will face a hike in national insurance.
The UK chancellor stressed at the government’s International Investment Summit that Labour manifesto’s promise to not increase national insurance contributions was related to taxes paid by working people rather than the sum paid by employers.
Indicating that employer NICs were in her sights, she said: ‘We were really clear in our manifesto that we weren’t going to increase the key taxes paid by working people: income tax, national insurance and VAT and, on the business side of commitment, that we would cap corporation tax at its current rate of 25% which was the lowest in the in the G7 and we will stick to the commitments we made in our manifesto.’
The euro stood at $1.0887, lower against $1.0910. Against the yen, the dollar was trading at JP¥149.32, down compared to JP¥149.83.
In London, easyJet, Barratt Redrow, and Taylor Wimpey were some of the FTSE 100’s best performers at the open, up 4.3%, 3.3%, and 2.2% respectively. By contrast, BP, Anglo American, and Shell lost 3.5%, 2.8%, and 2.6%.
In the FTSE 250, Bellway gained 8.2%.
For the year ended July 31, the construction firm reported pretax profit of £183.7 million, down 62% from £483.0 million a year prior. Revenue fell 30% to £2.38 billion from £3.41 billion.
Accordingly, Bellway slashed its total dividend to 54.0 pence from 140.0p the previous year.
Nevertheless, the firm remained positive on its order book forecast, with the book totalling 5,144 homes, up from 4,411 year-on-year. Order book value on July 31 was £1.41 billion, up from £1.19 billion the year before.
Bellway is targeting at least 8,500 homes in financial 2025, up from 7,654 in financial 2024.
Elsewhere, De La Rue jumped 18%.
Its wholly owned subsidiary, De La Rue Holdings, has agreed to sell the group’s authentication division to Crane NXT and its related entities for a cash consideration representing an enterprise value of £300 million. Of this, 5% will be held in escrow for up to 18 months following completion.
Proceeds will go towards repaying De La Rue’s existing revolving credit facility in full and reducing leverage to a net cash position; and reducing the deficit on the group’s legacy defined benefit pension scheme by paying £30 million as an accelerated contribution on completion. The transaction is expected to complete in the first half of 2025.
Meanwhile, Applied Nutrition set the price range for its planned initial public offering at 136 to 160 pence per share, implying an estimated market capitalisation at admission of between £340 million and £400 million.
The offer comprises up to 137.4 million existing shares to be sold by certain existing shareeholders of the company.
In Asia on Tuesday, the Nikkei 225 index in Tokyo was up 0.8%. In China, the Shanghai Composite was down 2.4%, while the Hang Seng index in Hong Kong was down 3.9%. The S&P/ASX 200 in Sydney closed up 0.8%.
Industrial production and shipments in Japan decreased in August after rising in July, according to revised figures from the Ministry of Economy, Trade & Industry.
The seasonally adjusted industrial production index posted 99.7 points in August, down 3.3% from July. The original index was down 4.9% at 91.4 from August 2023, after the seasonally adjusted index rose 3.1% on-month and rose 2.9% annually in July.
Shipments fell 4.1% from July and 6.5% annually, having grown in July by 2.7% monthly and 2.0% from the previous year. The unadjusted production capacity index posted 97.3 points, down 0.3% from July and down 1.0% from August 2023.
In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.5%, the S&P 500 up 0.8% and the Nasdaq Composite up 0.9%.
The US Federal Reserve should be more careful with its pace of rate cuts than it was in September, a senior bank official said, pointing to ‘disappointing’ recent inflation data.
Federal Reserve Governor Christopher Waller told a conference in California, the latest inflation figures were ‘disappointing,’ according to prepared remarks.
A Labor Department report last week showed US consumer inflation cooled in the year to September, but a measure stripping out volatile food and energy costs rose slightly. Economic growth and employment, however, have remained strong despite the Fed’s elevated interest rates.
Meanwhile, in politics, Democratic presidential candidate Kamala Harris is set to give her first interview to the conservative television channel Fox News, less than three weeks before the US presidential election on November 5.
The conversation with moderator Bret Baier is scheduled to air on Wednesday evening at 2200 GMT, the channel announced. It will take place in the battleground state of Pennsylvania.
At a rally in Erie, the most evenly-divided of Pennsylvania’s counties, the Democrat VP played a video montage of Trump calling for the jailing of political opponents and repeatedly referring to ‘the enemy from within.’
It included a weekend interview on Fox News in which Trump suggested ‘sick people, radical left lunatics’ could be ‘very easily handled’ by the military under a Trump administration.
Harris said Trump would persecute groups he has targeted before, including journalists, election officials and judges who ‘insist on following the law, instead of bending to his will.
Brent oil was quoted at $74.70 a barrel early in London on Tuesday, down from $77.19 late Monday.
Gold was quoted higher at $2,648.40 an ounce against $2,646.29.
Still to come on Tuesday’s economic calendar, there is the New York empire state manufacturing index and the Redbook index from the US.
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