London midday: Stocks nudge down after jobs data; Royal Mail and TalkTalk rally

London stocks had nudged a touch lower by midday on Tuesday as investors digested the latest UK jobs data, although there were some bright spots on the corporate front in the form of updates from the likes of Royal Mail and TalkTalk.

The FTSE 100 was down 0.1% to 7,590.33, while the pound was up 0.1% against the dollar at 1.3246 and flat versus the euro at 1.1300 after figures from the Office for National Statistics showed pay growth slowed to its weakest in six months in the three months to May despite record employment.

Spreadex analyst Connor Campbell said the jobs report "failed to move the needle, with investors seemingly waiting for Wednesday’s inflation reading before making a call on what the Bank of England might do in August".

Pay including bonuses rose at an annual rate of 2.5%. The rate of increase was slightly lower than the 2.6% recorded in the previous two three month periods. Regular pay growth slowed to 2.7% from 2.78% in the previous two periods. Both figures for pay growth were in line with economists’ average forecast.

Wage growth eased even as the number of people in work increased and the number of people unemployed fell. The employment rate rose from 74.9% a year earlier to 75.7% – the highest since comparable records began in 1971. The unemployment rate of 4.2% was down from 4.5% a year ago and was the joint lowest since 1975.

Ian Stewart, chief economist at Deloitte, said: "Low unemployment is yet to generate serious wage pressures and Brexit uncertainties continue to reign. The case for raising interest rates in August may have strengthened, but is hardly compelling."

On the political front, Prime Minister Theresa May narrowly avoided a defeat at the hands of the hard Brexit fraction of her party on Monday by supporting a vote on four amendments to the customs bill. The key amendment prohibits HMRC from collecting VAT and other duties on European goods unless the EU is doing the same with UK goods.

Investors were also looking ahead to Federal Reserve chairman Jerome Powell's two-day Congressional testimony, which kicks off at 1500 BST.

CMC Markets analyst Michael Hewson said: "He is likely to be quizzed on the likelihood of seeing another two rate rises this year and whether policymakers are starting to worry about the economy running too hot. He could also be asked if officials have concerns about the flattening of the yield curve and what the possible causes might be."

In corporate news, Royal Mail was the standout performers despite a warning that annual addressed letter volumes would decline more than expected due to the impact of the GDPR. But with its shares having lost almost a quarter since mid-May, reassurance that trading in the first quarter was in line with its expectations was well received.

Housebuilder Galliford Try rallied on the back of a solid trading update, taking larger peers Berkeley and Taylor Wimpey up with it.

TalkTalk rallied as it posted a 4.1% jump in first-quarter revenue and said it added 80,000 net broadband customers, taking the total to 4.22m. The company also maintained its full-year guidance for 15% growth in earnings before interest, taxes, depreciation and amortisation.

Dairy Crest gained after the Cathedral City owner maintained its outlook for the year and said trading in the first quarter has been in line with its expectations.

Food outlet operator SSP Group rose after saying it had had a "good" third quarter, with total group revenue up 7.3% at constant currency.

Rio Tinto ticked higher after saying it enjoyed strong second-quarter production across most of its commodities and business units.

Going the other way, British Land retreated as it said the combined impact of administrations and company voluntary arrangements since 1 April 2017 is 1.6% of total group contracted rent, up from 1% at the time of the preliminary results in May.

Hospital operator Spire Healthcare slipped as it announced the appointment of Jitesh Sodha - formerly CFO at De La Rue - as its new chief financial officer.

In broker note action, Greene King was knocked lower after Berenberg reiterated its 'sell' rating on the pub group saying it continues to believe it's a value trap, while underlying trading remains weak.

Stagecoach was upgraded to 'neutral' at Citi, while Morgan Advanced Materials was raised to 'overweight' at JPMorgan. ASOS was lifted to 'buy' by Goldman Sachs but Paddy Power was hit by a downgrade to 'sell' at Investec.

Market Movers

FTSE 100 (UKX) 7,590.33 -0.13%
FTSE 250 (MCX) 20,831.09 0.15%
techMARK (TASX) 3,560.33 -0.13%

FTSE 100 - Risers

Royal Mail (RMG) 496.60p 3.29%
Berkeley Group Holdings (The) (BKG) 3,648.00p 1.50%
Micro Focus International (MCRO) 1,260.00p 1.49%
Antofagasta (ANTO) 950.80p 1.36%
Carnival (CCL) 4,368.00p 1.13%
easyJet (EZJ) 1,657.00p 1.13%
Taylor Wimpey (TW.) 176.65p 1.03%
Intertek Group (ITRK) 5,812.00p 0.94%
Rio Tinto (RIO) 4,040.50p 0.91%
Smith (DS) (SMDS) 500.40p 0.89%

FTSE 100 - Fallers

Paddy Power Betfair (PPB) 8,305.00p -2.29%
BT Group (BT.A) 216.60p -2.21%
Imperial Brands (IMB) 2,803.00p -1.77%
British American Tobacco (BATS) 3,810.00p -1.61%
Standard Chartered (STAN) 664.80p -1.55%
British Land Company (BLND) 642.20p -1.47%
WPP (WPP) 1,200.00p -1.32%
Barclays (BARC) 189.26p -1.18%
Centrica (CNA) 155.65p -1.17%
Reckitt Benckiser Group (RB.) 6,428.00p -1.15%

FTSE 250 - Risers

TalkTalk Telecom Group (TALK) 119.67p 8.89%
Daejan Holdings (DJAN) 6,216.63p 6.82%
Morgan Advanced Materials (MGAM) 355.00p 4.47%
Stagecoach Group (SGC) 159.60p 4.38%
Quilter (QLT) 155.03p 4.05%
Galliford Try (GFRD) 864.58p 3.73%
Go-Ahead Group (GOG) 1,437.95p 3.60%
IP Group (IPO) 142.46p 3.23%
Dairy Crest Group (DCG) 482.00p 2.86%
Hochschild Mining (HOC) 178.65p 2.79%

FTSE 250 - Fallers

Greene King (GNK) 537.53p -5.43%
Alfa Financial Software Holdings (ALFA) 162.40p -4.47%
Elementis (ELM) 256.00p -1.92%
Convatec Group (CTEC) 204.40p -1.87%
Provident Financial (PFG) 634.80p -1.86%
Entertainment One Limited (ETO) 377.80p -1.61%
Wetherspoon (J.D.) (JDW) 1,257.90p -1.57%
Polar Capital Technology Trust (PCT) 1,297.78p -1.53%
Wood Group (John) (WG.) 605.80p -1.40%
Dixons Carphone (DC.) 180.80p -1.34%