London midday: Stocks maintain mild gains, pound slips on UK employment data

London stocks were holding on to mild gains by midday, but the pound slipped back following the release of mixed UK employment data, as investors looked to the Federal Reserve’s latest policy announcement.

The FTSE 100 was up 0.2% to 7,371.56, with heavily-weighted miners providing much of the upside as metals prices firmed.

Meanwhile, the pound reversed earlier gains, dipping back below $1.220 following the release of data showing a drop in the UK unemployment rate but a slowdown in wage growth.

Unemployment levels in the UK fell to the lowest rate since the summer of 1975, but wage growth continued to slow and reinforce the sharp squeeze on consumers coming from rising inflation.

The UK ILO unemployment rate for the three months January slipped to 4.7% from 4.8% a month ago, the Office for National Statistics revealed, while the consensus estimate was for it to remain the same.

Employment improved by 92,000 in the three month period, above the consensus for a 87,000 rise and outpacing the increase in the labour force, with unemployment dipping 31,000 alongside a pick-up in vacancies.

But the 'wageless recovery' continued, with average weekly earnings growth contracting to 2.2% for the three months to January, down from the 2.6% in December and lower than the 2.4% consensus. Excluding bonuses, the rate fell to 2.3% from 2.6%, with the forecast having pointed to 2.5%,

A more timely measure of unemployment, the claimant count rate for February improved to 2.1% from the revised previous 2.2%, with a jobless claims fall in February of 11,300 after the revised previous decline of 41,400 in January.

Chris Williamson, chief business economist at IHS Markit, said: “Signs of UK wage growth cooling add to warning shots that the economy is slowing, and suggest that policymakers will take an increasing dovish stance in coming months.

“Better news on unemployment and hiring will meanwhile help bolster confidence in the economy’s resilience as the UK heads closer to invoking Article 50, but the combination of record employment and falling pay growth remains a major concern.”

With the UK data out of the way, the next big focus will be the Federal Reserve’s policy announcement, which is due after the London close at 1800 GMT. With a 25-basis points rate hike priced in, investors will be turning their attention to the ‘dot plot’ for future rate hike projections.

In corporate news, Hikma Pharmaceuticals rallied after it nudged its dividend higher as operating profits were held back last year due to a combination of lower profits from the generics business, greater investment in growth and currency effects.

AstraZeneca ticked up after saying results from the Phase 3 trial of its ovarian cancer treatment Lynparza had demonstrated a “significant improvement in progression-free survival” (PFS).

Lloyds Banking Group edged higher as the government reduced its stake in the bank to below 3% overnight.

Specialist landscape products group Marshalls surged after it reported a 31% jump in full-year profit thanks to an improvement in operating margins.

Glencore was boosted by an upgrade to ‘buy’ from ‘neutral’ by Goldman Sachs, with positive sector comments from the market-moving investment bank boosting sentiment alongside firmer iron ore and copper prices that would also help the likes of Rio Tinto, Antofagasta and Anglo American.

On the downside, housebuilders Persimmon, Taylor Wimpey and Barratt Developments were under pressure after the Royal Institution of Chartered Surveyors said Britain’s construction industry could lose around 200,000 workers from the EU if it doesn’t retain its access to the single market.

Sports Direct nudged down after the company said a report about its chief executive-to-average employee pay was “'fake news”, while Playtech fell on news that its founder has agreed to sell a 4.1% stake in the company.

St Modwen Properties also retreated after confirming that a period of exclusivity which was recently granted to a prospective buy of its 10-acre site at New Covent Garden Market has now expired.

Market Movers

FTSE 100 (UKX) 7,371.56 0.19%
FTSE 250 (MCX) 18,886.22 -0.34%
techMARK (TASX) 3,465.23 -0.25%

FTSE 100 - Risers

Hikma Pharmaceuticals (HIK) 2,279.00p 7.20%
Rio Tinto (RIO) 3,394.50p 2.40%
Wolseley (WOS) 5,165.00p 2.38%
Antofagasta (ANTO) 806.50p 2.28%
Glencore (GLEN) 321.85p 1.84%
Morrison (Wm) Supermarkets (MRW) 238.90p 1.66%
Anglo American (AAL) 1,198.50p 1.57%
BHP Billiton (BLT) 1,292.00p 1.33%
Fresnillo (FRES) 1,459.00p 1.11%
BP (BP.) 461.75p 1.04%

FTSE 100 - Fallers

Persimmon (PSN) 2,053.00p -2.10%
Taylor Wimpey (TW.) 188.00p -1.67%
Sage Group (SGE) 636.50p -1.47%
3i Group (III) 722.50p -1.23%
Informa (INF) 644.00p -1.15%
Barratt Developments (BDEV) 529.00p -1.12%
Old Mutual (OML) 223.00p -1.11%
Provident Financial (PFG) 2,911.00p -1.09%
Next (NXT) 3,893.00p -0.92%
Royal Mail (RMG) 401.60p -0.89%

FTSE 250 - Risers

Marshalls (MSLH) 332.00p 4.96%
Ferrexpo (FXPO) 155.80p 3.87%
IP Group (IPO) 154.60p 3.07%
Ibstock (IBST) 207.10p 3.03%
Petra Diamonds Ltd.(DI) (PDL) 127.90p 2.73%
Vedanta Resources (VED) 834.50p 2.46%
Clarkson (CKN) 2,763.00p 2.33%
Paragon Group Of Companies (PAG) 424.80p 2.24%
Tullow Oil (TLW) 239.00p 2.01%
Polymetal International (POLY) 947.00p 1.99%

FTSE 250 - Fallers

St. Modwen Properties (SMP) 313.00p -5.09%
PayPoint (PAY) 947.00p -3.76%
SIG (SHI) 110.90p -3.48%
Ted Baker (TED) 2,757.00p -2.85%
Ocado Group (OCDO) 248.90p -2.85%
Workspace Group (WKP) 755.50p -2.52%
Supergroup (SGP) 1,444.00p -2.43%
Carillion (CLLN) 218.10p -2.42%
Sophos Group (SOPH) 262.60p -2.27%
Pets at Home Group (PETS) 184.10p -2.23%