Stocks in London started off steady on Tuesday, with Vodafone leading the FTSE 100 on the back of better-than-expected annual results, as new data showed a slight increase in the UK unemployment rate.
The FTSE 100 index opened up 9.70 points, 0.1%, at 8,425.78. The FTSE 250 was up 20.22 points, 0.1%, at 20,580.56, and the AIM All-Share was down 1.15 points, 0.2%, at 785.11.
The Cboe UK 100 was up 0.2% at 841.67, the Cboe UK 250 was up 0.1% at 17897.03, and the Cboe Small Companies little changed at 16035.29.
In European equities on Tuesday, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was down 0.2%.
The UK unemployment rate edged up slightly in the three months to March, official data showed on Tuesday, while wage growth came in hotter than expected.
According to the Office for National Statistics, the nation’s unemployment rate in the three months to March ticked up to 4.3% from 4.2% in the three months to February. The reading landed in line with FXStreet-cited market consensus.
The ONS said average earnings excluding bonuses rose 6.0% on-year in the period, matching the pace of growth in the three months to February. Including bonuses, wages increased 5.7%, also matching the prior month, which was revised upwards from 5.6%. Market consensus had been anticipating a rise of just 5.3%.
ING’s James Smith said the main takeaway from the figures was that the UK jobs market ‘is cooling and that’s gradually translating into lower wage growth.’
He said the softer jobs data appears to be resulting in some gradual decline in wage growth even though the headline regular pay measure came in a tad above consensus.
Smith explained this appears to be accounted for by the public sector, which the Bank of England has signalled is of ‘lesser significance to monetary policy decisions right now.’
He believes next week’s services inflation figures are going to be the ‘single most important determinant’ of whether the BoE cuts rates in June.
He thinks while services CPI will fall back on-year the risk is that this fall will be ‘slightly less dramatic’ than the BoE expects.
‘If we’re right, then that slightly favours August over June as the start date for rate cuts. But in all honesty, we think it’s looking pretty 50-50 right now.’
The pound was quoted at $1.2519 early on Tuesday in London, down from $1.2552 at the equities close on Monday. The euro stood at $1.0777, down against $1.0791. Against the yen, the dollar was trading at JP¥156.44, up compared to JP¥155.87.
In the FTSE 100, Vodafone was the best performing stock, up 3.4%.
In the year to March, the telco said revenue edged down 2.5% year-on-year to €36.72 billion from €37.67 billion. Pretax profit plunged to €3.67 billion from €14.45 billion, primarily reflecting gains on disposals seen in the prior year, in particular the €8.6 billion from the sale of Vantage Towers.
But Vodafone highlighted a return to growth in Germany as it said it was ‘delivering growth in all of our markets across Europe and Africa.’
Chief Executive Margherita Della Valle said: ‘We performed slightly ahead of expectations in the financial year,’ but added that ‘much more still needs to be done in the year ahead.’
Leading the fallers was DCC, down 4.3%.
The distribution group reported a 9.6% drop in revenue while pretax profit edged 1.8% lower in the year ending March.
Revenue in DCC Energy was £14.2 billion, a decrease of 12% on-year, reflecting the lower wholesale cost of energy commodities during the year.
DCC Healthcare recorded revenue of £859.4 million, up 4.6% on-year driven by the acquisition of Medi-Globe completed in September 2023.
Anglo American eased 1.3% as it unveiled a new ‘radical’ strategy that will see it keep copper and iron ore assets, while getting rid of platinum and diamond businesses.
The move, which follows a ‘comprehensive asset review’, comes a day after the London-based mining company rebuffed a sweetened offer from BHP Group, its major peer.
To unlock shareholder value and to simplify its portfolio, Anglo American said on Tuesday said it intends to ‘demerge’ Anglo American Platinum Ltd and also ‘divest’ or ‘demerge’ De Beers as part of its new strategy.
The diversified miner also wants to divest its steelmaking coal business, saying it is already responding to ‘strong’ buyer interest. It is also exploring options for care and maintenance and divestment of its nickel operations.
In the FTSE 250, Currys soared 9.0%, helping pull AO World 5.6% higher.
The electricals retailer raised full-year profit guidance after a reporting like-for-like sales returned to growth in the 16 weeks to April 27.
As a result, Currys expects full-year adjusted pretax profit will be £115 million to £120 million, up from guidance of at least £105 million before.
Chief Executive Alex Baldock said: ‘Our performance is strengthening, with good momentum in the UK&I, and with the Nordics getting back on track. Sales are now growing again, margins are benefiting from higher customer adoption of solutions and services, and cost discipline is good. All this means improved profits and, with our strong cash position, we’re well set up for the year ahead.’
But bakery chain Greggs, famous for its sausage rolls, fell 1.0% despite stating its expectations for its full year remain unchanged after seeing good progress in 2024.
In the first 19 weeks of the year, Greggs said like-for-like sales in company-managed shops were up 7.4% on the prior year, seeing growth across all channels. Sales totalled £693 million, up from £609 million a year before. It remains confident in 140 to 160 net shop openings for the full year.
Elsewhere, Headlam dropped 9.1% after warning it expects to report a ‘significant’ pre-tax loss in the first half.
Headlam said revenue in the four months to April was down 12% and that sales in April did not show the expected seasonal uplift usually seen.
In Asia on Tuesday, the Nikkei 225 index in Tokyo closed up 0.5%. In China, the Shanghai Composite was down 0.1%, while the Hang Seng index in Hong Kong was down 0.2%. The S&P/ASX 200 in Sydney closed down 0.3%.
In the US on Monday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.2%, the S&P 500 flat and the Nasdaq Composite up 0.3%.
The main focal point for investors this week will be Wednesday’s US inflation figures, which will likely inform market expectations of potential US interest rate cuts.
According to FXStreet-cited consensus, consumer prices are expected to have risen 3.4% annually in April, cooling slightly from 3.5% in March.
Markets will also hear from Federal Reserve Chair Jerome Powell on Tuesday.
Brent oil was quoted at $83.16 a barrel early in London on Tuesday, down from $83.66 late Monday.
Gold was quoted at $2,339.48 an ounce against $2,333.92.
Still to come is US producer prices data at 1330 BST.
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