London open: Stocks gain as banks rally; jobs data in focus

London stocks rose in early trade on Tuesday following days of losses, but gains were unspectacular amid worries about more aggressive tightening by the US Federal Reserve.

At 0930 BST, the FTSE 100 was up 0.3% at 7,226.80.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "The US market entered bear territory last night, with its main markets dropping to long-forgotten lows. The crux of the concern plaguing investors is how harshly the Fed plans to tackle rising inflation in the face of stark new CPI data.

"Getting the balance wrong and hiking interest rates too aggressively could see recession fears become a reality. Concerns may be partially extinguished by today’s US producer prices index (PPI) report, which has started to suggest signs of slowing recently. This is also seen as a leading indicator, compared to backwards looking data sets like CPI."

On home shores, figures released earlier by the Office for National Statistics showed the unemployment rate unexpectedly rose in the three months to April for the first time in a year, while vacancies remained at record levels and wages fell at the fastest rate in a decade.

The unemployment rate ticked up to 3.8% from 3.7% in the three months to March and versus expectations for a decline to 3.6%. Still, it remained close to 50-year lows.

The number of people on payrolls rose by 90,000 in May to a fresh record high of 29.6m and the number of job vacancies in March to May hit a new record high of 1.3m.

The data also showed that before inflation, total pay including bonuses grew 6.8% in the year to February-April and regular pay excluding bonuses was up 4.2%. However, real wages adjusted for inflation running at around 9% fell 2.2% on the year - the biggest decline since 2011.

Sam Beckett, ONS head of economic statistics, said: "Today's figures continue to show a mixed picture for the labour market.

"While the number of people in employment is up again in the three months to April, the figure remains below pre-pandemic levels.

"Moreover, although the number of people neither in work nor looking for a job has fallen slightly in the latest period, that remains well up on where it was before Covid-19 struck.

"At the same time, unemployment is close to a 50-year low point and there was a record low number of redundancies.

"Job vacancies are still slowly rising, too. At a new record level of 1.3 million, this is over half a million more than before the onset of the pandemic.

"The high level of bonuses continues to cushion the effects of rising prices on total earnings for some workers, but if you exclude bonuses, pay in real terms is falling at its fastest rate in over a decade."

In equity markets, banks were the standout gainers, with HSBC, Standard Chartered, NatWest and Lloyds all up amid the prospect of higher interest rates.

Paragon Banking Group was in the black after it posted record half-year profits, while housebuilder Crest Nicholson also rose after upgrading its FY22 earnings guidance.

Rail and bus operator FirstGroup, which last week rejected a £1.23bn takeover approach, gained after it reported higher full-year adjusted operating profits as travel recovered from the Covid pandemic.

Go-Ahead surged amid the possibility of a takeover battle as Kelsian said it was still interested in making an offer even after the London-listed transport operator accepted a £647.7m offer from Australian bus firm Kinetic and Spanish infrastructure investor Globalvia Inversiones.

On the downside, equipment rental company Ashtead fell despite saying it had delivered a record full year, with both revenue and profits up following a solid fourth quarter.

Market Movers

FTSE 100 (UKX) 7,226.80 0.29%
FTSE 250 (MCX) 19,209.84 0.26%
techMARK (TASX) 4,205.30 -0.25%

FTSE 100 - Risers

HSBC Holdings (HSBA) 517.90p 2.98%
Standard Chartered (STAN) 594.40p 2.59%
Fresnillo (FRES) 808.20p 2.30%
NATWEST GROUP PLC ORD 100P (NWG) 223.00p 1.83%
Lloyds Banking Group (LLOY) 43.58p 1.75%
Persimmon (PSN) 2,155.00p 1.75%
BT Group (BT.A) 182.45p 1.64%
Barratt Developments (BDEV) 482.90p 1.51%
Airtel Africa (AAF) 142.50p 1.50%
Scottish Mortgage Inv Trust (SMT) 705.40p 1.38%

FTSE 100 - Fallers

Kingfisher (KGF) 238.20p -3.01%
Royal Mail (RMG) 267.20p -2.20%
Ocado Group (OCDO) 863.00p -1.93%
Ashtead Group (AHT) 3,741.00p -1.66%
Flutter Entertainment (CDI) (FLTR) 8,088.00p -1.56%
JD Sports Fashion (JD.) 113.20p -1.52%
Rentokil Initial (RTO) 465.40p -1.48%
Next (NXT) 6,004.00p -1.35%
Halma (HLMA) 1,978.00p -1.20%
SSE (SSE) 1,689.00p -1.14%

FTSE 250 - Risers

Paragon Banking Group (PAG) 514.00p 9.36%
Crest Nicholson Holdings (CRST) 271.80p 6.59%
OSB Group (OSB) 498.40p 4.18%
Close Brothers Group (CBG) 1,054.00p 4.05%
Discoverie Group (DSCV) 709.00p 3.96%
National Express Group (NEX) 225.80p 2.82%
BMO Global Smaller Companies (BGSC) 146.80p 2.51%
BlackRock Smaller Companies Trust (BRSC) 1,408.00p 2.33%
Bellway (BWY) 2,258.00p 2.22%
AVI Global Trust (AGT) 185.80p 2.09%

FTSE 250 - Fallers

Greencore Group (CDI) (GNC) 108.10p -3.05%
Moonpig Group (MOON) 221.20p -2.81%
Urban Logistics Reit (SHED) 161.00p -2.42%
Dunelm Group (DNLM) 775.50p -2.21%
888 Holdings (888) 175.60p -2.17%
Oxford Biomedica (OXB) 441.50p -2.11%
Baillie Gifford Japan Trust (BGFD) 700.00p -1.82%
Aston Martin Lagonda Global Holdings (AML) 530.20p -1.81%
Spire Healthcare Group (SPI) 223.00p -1.76%
Ascential (ASCL) 265.80p -1.70%