Stock prices in London opened in the green on Tuesday, as the UK unemployment rate fell against expectations while wage growth decelerated to its lowest level in two years.
The FTSE 100 index opened up 33.29 points, or 0.4%, at 8,243.73. The FTSE 250 was up 17.80 points, or 0.1%, at 20,694.99, and the AIM All-Share was up 1.23 points, or 0.2%, at 768.22.
The Cboe UK 100 was 0.3% at 822.50, the Cboe UK 250 was up 0.1% at 18,117.63, and the Cboe Small Companies was flat at 16,780.07.
In European equities on Tuesday, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was fractionally higher.
Locally, the biggest economic news of the morning was UK unemployment.
Analysts from ING said that while officials are likely to disregard the latest fall in the jobs rate, sticky wage growth suggests the Bank will keep rates on hold in September before resuming cuts in November.
According to the Office for National Statistics, the unemployment rate for the April-to-June period eased to 4.2% from 4.4% for March to May. This outperformed the FXStreet-cited market consensus, which had expected an increase to 4.5%. The Bank of England had forecast the unemployment rate to remain at 4.4%.
Annual growth in employees’ average regular earnings, excluding bonuses, stood at 5.4% in the April to June period, a slowdown from 5.7% for March to May. The wage growth of just 5.4% was the lowest in two years. The last time it was lower was in May to July 2022, when it was 5.2%.
‘Today’s data will do little to shift this debate among committee members. In the short term, we think the stickiness in wage growth will keep the Bank moving cautiously on rate cuts. But assuming there is further progress on both that and services inflation over the next few months, we think the Bank will accelerate the pace of cuts beyond November. We expect Bank Rate to fall to 3.25% by this time next year,’ said ING.
Across the pond, the focus is on a producer price inflation reading, followed by a consumer price inflation reading on Wednesday. ING analysts said that ‘consensus expects a combination of data that will allow the Federal Reserve to cut in September.’
The pound was quoted at $1.2801 early on Tuesday in London, up compared to $1.2789 at the equities close. The euro traded at $1.1708, higher than $1.0937 late Monday. Against the yen, the dollar was quoted at JP¥147.89, higher versus JP¥147.61.
In London, Tate & Lyle gained 0.2%.
The FTSE 250 firm named Sarah Kuijlaars as it new chief financial officer, effective from September 16. Kuijlaars was previously CFO at both De Beers and Arcadis, and prior to that, had been deputy CFO at Rolls-Royce.
‘Her proven track record of financial leadership in large and dynamic global businesses will prove invaluable to us as we enter the next phase of our growth agenda as a focused food and beverage solutions business,’ Chief Executive Nick Hampton said of the appointment.
Also on the FTSE 250, Just Group jumped 10%.
Despite seeing pretax profit fall to £74 million in the first half, down from £117 million a year prior, the firm posted retirement income sales of £2.47 billion, up from £1.90 billion. New business profit rose to £222 million from £161 million, while underlying operating profit was £249 million, up from £173 million the previous year.
Looking ahead, Just Group said its outlook is positive, noting a ‘strong and resilient capital base and low-strain business model’. It now expects to ‘substantially beat previous 2024 guidance’, which was doubling 2021’s £211 million operating profit in three years.
Keywords Studios lost 0.2%.
The group, which provides technical and creative services for video game production, has bought Wushu Studios, a game development studio in Liverpool, for an undisclosed sum. Recent titles Wushu has worked on include Fall Guys, State of Decay, Forza Horizon 5 and Baldur’s Gate 3.
The consideration comprises an upfront and earn-out component and is expected to fall within the group’s targeted valuation range, Keywords explained.
In Asia on Tuesday, the Nikkei 225 index in Tokyo was up 3.5%. In China, the Shanghai Composite was up 0.3%, while the Hang Seng index in Hong Kong was up 0.4%. The S&P/ASX 200 in Sydney closed up 0.2%.
According to the Bank of Japan, producer prices ticked up to 3.0% on-year in July, from 2.9% in June. The increase was in line with FXStreet-cited consensus. On a monthly level, producer prices rose by 0.3% in July from 0.2% in June. Import prices were up 1.6% on-year in July, and up 0.4% on-month.
Meanwhile, in the latest data from Australia, the Westpac–Melbourne Institute consumer sentiment index rose 2.8% to 85.0 in August from 82.7 in July, and from 81.0 in the same month a year prior.
‘The component indexes show a clear improvement in the latest sentiment data, centred around family finances,’ explained Matthew Hassan, head of Australian macro-forecasting.
In the US on Monday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.4%, the S&P 500 little changed, and the Nasdaq Composite up 0.2%.
Donald Trump criticised the EU and his Democratic opponents during a delayed, two-hour conversation with Elon Musk on X. The interview, due to start after midnight on Tuesday, was put back by more than 40 minutes by technical problems with X owner Musk blaming a cyber attack on the platform.
Musk made no mention of his disagreement with Prime Minister Keir Starmer over Britain’s riots and free speech, but he did raise the open letter posted by EU internal market head Thierry Breton’s asking him not to spread disinformation when interviewing the former president.
Trump responded by claiming the EU is ‘bad’ on trade with the US and criticising Nato for not spending enough on defence. ‘That’s probably why they notified you,’ Trump said. ‘They don’t treat our country well.
Brent oil was quoted at $81.81 a barrel early in London on Tuesday, up from $80.86 late Monday.
Gold was quoted at $2,462.90 an ounce, higher against $2,458.10 on Monday.
Still to come on Tuesday’s economic calendar, there are economic sentiment surveys from the eurozone and Germany at 1000 BST. Later in the day, US PPI at 1330 BST, and the US Redbook index at 1355 BST.
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