London midday: Stocks edge up as investors mull employment data
London stocks edged higher, with financials boosted by unexpectedly hawkish comments from Federal Reserve chair Janet Yellen on Tuesday, as investors digested news that UK wage growth has slowed but unemployment has picked up.
At midday, the FTSE 100 was up 0.4% to 7,296.76. Meanwhile, oil prices retreated, with West Texas Intermediate and Brent crude down 0.5% to $52.91 a barrel and $55.69, respectively.
Data from the Office for National Statistics showed UK wage growth surprisingly slowed in December as the labour market otherwise improved slightly.
The headline unemployment rate remained at 4.8%, as expected, and with employment improving by 37,000 in the three months to December total employment reached a new record high of 74.6%.
Meanwhile, the jobless claimant count showed a big drop of 42.4K versus the 20.5K fall in December, while the forecast had been for a small 1K rise.
The ONS said the labour market "appears to be edging towards full capacity", also noting that the employment rate rate for women reached 70% for the first time on record.
However, average earnings including bonuses slowed to 2.6% in December from the previous 2.8%, noticeably short of the 2.8% consensus forecast. Excluding bonuses, wages fell to 2.6% from 2.7%, when no change was again forecast.
Furthermore, year-over-year growth in average weekly wages fell to 1.9% in December, the lowest rate since February, from 2.9% in November.
Spreadex’s Connor Campbell said: “Following yesterday’s inflation increase the focus of this morning’s UK jobs report was rightly on wage growth – and the news wasn’t good.
"Overall the mixed nature of the jobs report meant the morning’s trading trends weren’t significantly disrupted.”
Long-dated gilt yields declined and sterling fell 0.3% following the data.
Yellen, who will testify before the House Financial Services Committee later on Wednesday, said that a "rate increase will likely be appropriate in upcoming meetings" if the economic recovery stays on course, which saw the dollar rally and US stocks hit new records.
Banks were among the top performers on Wednesday, underpinned by signs the US could raise rates sooner than expected, with Barclays, RBS and Standard Chartered all in the black.
Defence technology specialist Qinetiq rallied after saying underlying trading was as expected during the third quarter and that its aspirations for the full year to end-March were unchanged.
Ashtead got a boost as Bank of America Merrill Lynch upped its price target on the stock to 2,000p from 1,620p and reiterated its ‘buy’ rating.
Transport operator Stagecoach edged up as it said it has sold its interest in the Twin America joint venture for an undisclosed sum.
FTSE 250 financial broker NEX Group fell after it posted an 11% rise in revenue for the third quarter as Donald Trump’s US presidential win lifted trading activity, although the company warned it was still too early to assume that a period of subdued market conditions had come to an end.
Elsewhere, bookmakers William Hill and Ladbrokes were under the cosh after HSBC downgraded both stocks in light of a potential consumer slowdown and growing regulatory risks.
Market Movers
FTSE 100 (UKX) 7,296.76 0.39%
FTSE 250 (MCX) 18,811.61 0.13%
techMARK (TASX) 3,348.62 0.18%
FTSE 100 - Risers
Ashtead Group (AHT) 1,728.00p 3.72%
BHP Billiton (BLT) 1,420.50p 2.05%
Royal Bank of Scotland Group (RBS) 245.50p 1.87%
Barclays (BARC) 239.50p 1.81%
Lloyds Banking Group (LLOY) 67.63p 1.71%
Smurfit Kappa Group (SKG) 2,165.00p 1.31%
Standard Chartered (STAN) 809.10p 1.29%
BT Group (BT.A) 309.55p 1.24%
Associated British Foods (ABF) 2,553.00p 1.15%
Legal & General Group (LGEN) 246.50p 1.07%
FTSE 100 - Fallers
TUI AG Reg Shs (DI) (TUI) 1,145.00p -5.99%
Capita (CPI) 519.50p -1.42%
Next (NXT) 3,910.00p -1.09%
Micro Focus International (MCRO) 2,194.00p -1.08%
Paddy Power Betfair (PPB) 8,465.00p -0.99%
Dixons Carphone (DC.) 310.30p -0.86%
Marks & Spencer Group (MKS) 333.60p -0.86%
Antofagasta (ANTO) 872.00p -0.80%
InterContinental Hotels Group (IHG) 3,809.00p -0.78%
Informa (INF) 658.00p -0.75%
FTSE 250 - Risers
Acacia Mining (ACA) 523.50p 4.28%
CLS Holdings (CLI) 1,701.00p 3.53%
Entertainment One Limited (ETO) 254.00p 3.25%
NewRiver REIT (NRR) 333.00p 3.06%
Aldermore Group (ALD) 234.60p 2.99%
Hunting (HTG) 584.50p 2.54%
Ibstock (IBST) 195.30p 2.25%
Virgin Money Holdings (UK) (VM.) 352.60p 2.20%
OneSavings Bank (OSB) 363.60p 2.19%
Safestore Holdings (SAFE) 392.90p 2.10%
FTSE 250 - Fallers
Ladbrokes Coral Group (LCL) 121.80p -3.18%
William Hill (WMH) 265.40p -2.43%
Tullow Oil (TLW) 269.90p -1.53%
Pets at Home Group (PETS) 181.50p -1.47%
B&M European Value Retail S.A. (DI) (BME) 298.00p -1.42%
RPC Group (RPC) 924.00p -1.28%
Thomas Cook Group (TCG) 88.50p -1.23%
Carillion (CLLN) 220.40p -1.21%
JPMorgan Indian Investment Trust (JII) 657.00p -1.20%
Ferrexpo (FXPO) 173.50p -1.20%