London close: BHP, Just Eat underpin buoyant FTSE
London stocks finished in a mixed state on Tuesday, helped along by well-received earnings from the likes of BHP and Just Eat, as investors digested the latest UK jobs data.
At the close, the FTSE 100 was up 0.38% at 7,181.11, while the FTSE 250 slipped 0.08% to 23,693.53.
Sterling was painting a weaker picture, last trading 0.78% lower on the dollar at $1.3741, and retreating 0.19% against the euro to change hands at €1.1735.
“Today has seen markets cool on the idea that the Australian and New Zealand central banks will soon embark on a round of monetary tightening, with lockdown measures across both countries highlighting the economic risk that remains despite relatively low Covid cases,” said IG senior market analyst Joshua Mahony.
“The pound has been hit hard over the course of the day, with expectations of a post-lockdown slump in unemployment claimants failing to materialise.”
While wages and the unemployment rate improved, Mahony said the figures were a “lagging reflection” of June, unlike the July claimant count figure.
“Travel stocks are experiencing yet another day of turbulence, with questions over travel regulations serving to highlight the uncertain road ahead.”
On the economic front, UK job vacancies hit a record high in the May-to-July period amid staff shortages in many industries.
The Office for National Statistics said vacancies rose by 290,000 from the previous quarter to 953,000, making for a 168,000 increase compared to pre-pandemic levels between January and March 2020.
Meanwhile, the unemployment rate in the three months to June ticked down 0.2 percentage points to 4.7%.
The data showed that the number of payroll employees rose 182,000 to 28.9m in July, although it remained 201,000 below pre-Covid levels.
Average weekly pay growth rose to 8.8% in June from 7.4% in May, hitting the highest level since the series began in 2001 and coming in above the Bank of England’s forecast of 8.5%.
Ruth Gregory, senior UK economist at Capital Economics, said the rise in average weekly pay would fuel concerns for the Monetary Policy Committee that higher CPI inflation would persist in 2022.
"Overall, we still think that the Bank of England won’t hike interest rates until mid-2023, rather than in mid-2022 as the markets expect.
“Today’s figures, however, suggest that the risks are tilted towards wage growth coming in a bit higher and the MPC raising rates a bit sooner than we anticipate.”
Grocery sales, meanwhile, fell 4% year-on-year over the 12 weeks to 8 August, although sales were declining much more slowly in the shorter term, by 0.5% over the past four weeks.
Data outlet Kantar said it was apparent that the Covid-19 pandemic was still having an impact on people’s spending as grocery sales remained 9.9% higher in the latest 12 weeks than in 2019.
“In the past month grocery sales were just 0.5% lower than this time last year - the best four week ending market performance since April,” said Fraser McKevitt, head of retail and consumer insight at Kantar.
“In monetary terms at least, we seem to be in a similar place to 12 months ago, but if we dig deeper into the data we can see that our shopping habits are actually very different.
“With the end of social distancing restrictions people have been happier to head into stores to make more regular, smaller shops.”
Across the pond, United States industrial production accelerated sharply last month, led by gains in manufacturing of motor vehicles, business equipment and defence and space equipment.
According to the Department of Commerce, total output jumped at a month-on-month clip of 0.9% in July, beating consensus forecasts for a 0.5% improvement.
Manufacturing output was especially strong, more than doubling economists' forecasts with a rise of 1.4%, compared to the 0.6% pencilled in by markets.
Also from the Commerce Department, US retail sales volumes dropped at a seasonally-adjusted month-on-month pace of 1.1% in July to reach $617.7bn.
That was well below the 0.2% dip that most forecasters had penciled-in and only slightly offset by a one tenth of a percentage point upwards revision to June's print to 0.7%.
Sales of motor vehicles and parts suffered by far the biggest fall, declining by 3.9% in comparison to the month before.
Clothing stores saw sales fall by 2.6% and non-store retailers by 3.1%.
In equity markets, BHP Group closed up 3.4% after agreeing to sell its petroleum business to Australia’s Woodside Petroleum, and posting a 42% jump in full-year net profit.
Russ Mould, investment director at AJ Bell, said the market was "clearly excited" about BHP’s move to sell the petroleum business.
“While investors are set to get shares in the combined venture rather than an immediate cash payout, this will give them the option of selling the shares should they choose and realising value that way,” he said.
Food delivery giant Just Eat Takeaway gained 2.87% after it posted a better-than-expected operating loss of €190m, as it continued to invest in its businesses and said it had "reached the peak of absolute losses".
Water pipe and ventilation group Genuit racked up gains of 4.07% after it lifted full-year guidance and reported higher interim profits, boosted by acquisitions.
Online trading platform Plus500 rallied 5.11% after it posted a dip in interim earnings and revenue as trading levels normalised, but said revenue for the year was set to be "significantly ahead" of current market forecasts.
On the downside, travel stocks were under the cosh again amid renewed concerns about the impact of the Delta variant.
Premier Inn owner Whitbread lost 2.45%, British Airways parent IAG descended 3.19%, InterContinental Hotels was 1.9% weaker, and TUI was 3.16% below the waterline.
Future was on the back foot by 4.39%, having gained sharply a day earlier after it announced the acquisition of consumer media company Dennis for around £300m in cash from Exponent Private Equity.
In broker note action, insurer Beazley was knocked 2.24% lower by a downgrade to 'sell' at UBS, while shopping centre owner Hammerson was off 5.5% on the back of a downbeat note from Liberum.
The broker, which rates the stock at ‘sell’ with a 27p price target, said capital values were still falling, with yields rising and rental values declining, with further to go yet.
"Vacancy is high and leases are over-rented,” it said.
“The allocation to underperforming assets is still too high.”
Market Movers
FTSE 100 (UKX) 7,181.11 0.38%
FTSE 250 (MCX) 23,693.53 -0.08%
techMARK (TASX) 4,801.80 0.46%
FTSE 100 - Risers
BHP Group (BHP) 2,358.00p 3.40%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,309.00p 2.87%
Rentokil Initial (RTO) 574.00p 2.53%
Hikma Pharmaceuticals (HIK) 2,581.00p 2.42%
Scottish Mortgage Inv Trust (SMT) 1,348.00p 2.08%
Ocado Group (OCDO) 1,840.50p 2.02%
Royal Dutch Shell 'B' (RDSB) 1,436.00p 1.82%
Fresnillo (FRES) 826.20p 1.77%
Royal Dutch Shell 'A' (RDSA) 1,449.00p 1.66%
Rolls-Royce Holdings (RR.) 111.46p 1.60%
FTSE 100 - Fallers
Kingfisher (KGF) 353.10p -3.15%
International Consolidated Airlines Group SA (CDI) (IAG) 159.88p -2.78%
Whitbread (WTB) 3,018.00p -2.65%
Johnson Matthey (JMAT) 2,943.00p -2.45%
InterContinental Hotels Group (IHG) 4,480.00p -2.33%
British Land Company (BLND) 520.60p -2.14%
Pearson (PSON) 762.00p -2.06%
Taylor Wimpey (TW.) 172.85p -2.01%
ITV (ITV) 118.25p -1.83%
Land Securities Group (LAND) 717.40p -1.81%
FTSE 250 - Risers
Plus500 Ltd (DI) (PLUS) 1,504.50p 5.25%
PureTech Health (PRTC) 336.50p 4.83%
Indivior (INDV) 178.70p 3.71%
AO World (AO.) 222.20p 2.87%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,309.00p 2.87%
Volution Group (FAN) 507.00p 2.71%
Genuit Group (GEN) 665.00p 2.62%
Airtel Africa (AAF) 96.15p 2.18%
Chemring Group (CHG) 337.00p 1.97%
Discoverie Group (DSCV) 1,064.00p 1.92%
FTSE 250 - Fallers
Hammerson (HMSO) 33.90p -5.50%
Avon Protection (AVON) 2,014.00p -4.55%
Future (FUTR) 3,694.00p -4.55%
Trainline (TRN) 338.80p -4.29%
Syncona Limited NPV (SYNC) 202.50p -4.03%
TUI AG Reg Shs (DI) (TUI) 312.70p -3.16%
Essentra (ESNT) 281.00p -2.94%
Shaftesbury (SHB) 619.50p -2.75%
Countryside Properties (CSP) 545.00p -2.68%
Tullow Oil (TLW) 44.51p -2.60%