London midday: Stocks extend losses as investors digest UK jobs data
London stocks had extended losses by midday on Tuesday as investors digested the latest batch of UK jobs data amid ongoing concerns about Sino-US trade relations and protests in Hong Kong.
The FTSE 100 was down 0.5% at 7,193.73, while the pound was flat against the dollar at 1.2079 and 0.1% firmer versus the euro at 1.0774.
CMC Markets analyst David Madden said: "Stocks are in the red as a series of factors continue to weigh on global sentiment. The US-China trade standoff, aggressive easing from some central banks, worries about a no-deal Brexit, chatter that Germany is heading towards a recession, political uncertainty in Italy, the financial meltdown in Argentina, and the tensions in Hong Kong are all contributing to the poor economic climate.
"Every corner of the global has negative news hanging over it, and that is why traders are trimming their equity positions."
On home shores, the latest set of jobs data from the Office for National Statistics showed the unemployment rate ticked a little higher in June, but wages picked up to their best level in more than decade.
Total earnings growth rose to 3.7% on the year in the three months to June from 3.5% in May, in line with analysts' expectations. This marked the best level since June 2008. Excluding bonuses, earnings growth rose to 3.9% from 3.6%, beating consensus expectations for growth of 3.8%.
The data revealed that Britain created 115,000 jobs in the second quarter, taking employment to a record level of 32.811 million. Analysts were expecting a 60,000 increase.
Meanwhile, the unemployment rate rose to 3.9%, missing expectations for it to remain unchanged at 3.8%. The number of people out of work declined by 33,000 to 1.33 million.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the labour market remained "remarkable resilient" in the second quarter, despite the economy’s slowdown and poor visibility on the outlook due to Brexit uncertainty. He said this was "another robust report", which undermines the case for a rate cut.
ING economist James Smith also said the figures suggest that any policy easing from the Bank of England is unlikely in the near term. "A lot depends on Brexit of course, but for the time being, we think markets may be slightly overestimating the chances of BoE easing - investors are now pricing in a rate cut by early 2020," he said.
In equity markets, InterContinental Hotels was under the cosh after a downgrade to 'hold' at Berenberg, while Croda was hit by a downgrade to 'sell' at Goldman Sachs.
Elsewhere, Aston Martin Lagonda shares fell after a downgrade to 'neutral' at Credit Suisse, which also slashed its price target to 529p from 1,630p. The bank said it was cutting its volume and pricing assumptions and its EBIT forecast for 2019 following the company's profit warning last month.
On the upside, precious metals miner Fresnillo shone as gold prices advanced, with Centamin, Hochschild and Polymetal also higher. Oanda analyst Craig Erlam said "everything is lining up nicely for the yellow metal, whether it be negative bonds yields, risk-aversion, a softer dollar or central bank easing".
Travel and tourism operator TUI rallied as it reported a sharp fall in third-quarter earnings but maintained its outlook for the full year. Underlying third-quarter core earnings fell 46% year-on-year to €100.9m (£93.7m), with a charge of €144m relating to costs from groundings of Boeing's 737 MAX jet after two fatal crashes this year.
The company said it expected the full year impact of the groundings would be €300m.
Richard Hunter, head of markets at Interactive Investor, said that "set against a raft of challenges, TUI is making valiant efforts to regain its previous growth".
"TUI had the kitchen-sink experience earlier in the year with two profit warnings, so the fact that there are no further shocks has resulted in a warm share price reaction to these numbers," he said.
He added: "The overall picture is one which shows the benefits of a diversified business model. Its significant other income streams, most notably Holiday Experiences, Cruises and Destination Experiences have performed strongly in the year to date. In terms of the summer so far, bookings are virtually flat as compared to last year, which is some achievement given the circumstances and the outlook for the remainder of the summer is upbeat."
Online trading platform Plus500 was a high riser after its first-half numbers came in as expected. The company posted a 59% slump in pre-tax profit to $63.9m as it took a hit from regulatory changes and a lack of volatility, and announced a share buyback of up to $50m.
FTSE 100 - Risers
Fresnillo (FRES) 708.60p 3.05%
Just Eat (JE.) 814.20p 1.72%
Vodafone Group (VOD) 149.40p 0.73%
Anglo American (AAL) 1,828.80p 0.63%
Royal Bank of Scotland Group (RBS) 202.20p 0.60%
TUI AG Reg Shs (DI) (TUI) 815.40p 0.59%
British Land Company (BLND) 477.01p 0.51%
United Utilities Group (UU.) 763.60p 0.50%
SSE (SSE) 1,114.50p 0.45%
GlaxoSmithKline (GSK) 1,675.60p 0.38%
FTSE 100 - Fallers
NMC Health (NMC) 1,806.00p -5.45%
Rolls-Royce Holdings (RR.) 728.40p -3.16%
Schroders (SDR) 2,702.00p -3.05%
InterContinental Hotels Group (IHG) 5,224.00p -2.86%
Ashtead Group (AHT) 2,116.00p -2.76%
Auto Trader Group (AUTO) 524.60p -2.49%
Melrose Industries (MRO) 165.14p -2.43%
Halma (HLMA) 1,940.50p -2.39%
Aveva Group (AVV) 3,746.00p -2.30%
International Consolidated Airlines Group SA (CDI) (IAG) 439.30p -2.12%
FTSE 250 - Risers
Plus500 Ltd (DI) (PLUS) 658.89p 15.31%
Sports Direct International (SPD) 236.00p 2.70%
IP Group (IPO) 62.05p 2.22%
Intu Properties (INTU) 35.08p 2.04%
Cairn Energy (CNE) 163.00p 1.94%
Vivo Energy (VVO) 118.00p 1.72%
IG Group Holdings (IGG) 549.40p 1.59%
Grafton Group Units (GFTU) 655.50p 1.55%
Clarkson (CKN) 2,349.99p 1.51%
Hochschild Mining (HOC) 225.80p 1.44%
FTSE 250 - Fallers
TI Fluid Systems (TIFS) 153.40p -7.26%
Card Factory (CARD) 152.59p -5.75%
Aston Martin Lagonda Global Holdings (AML) 487.40p -4.62%
Syncona Limited NPV (SYNC) 221.44p -4.35%
Tullow Oil (TLW) 205.60p -4.15%
Savills (SVS) 846.00p -3.92%
Future (FUTR) 968.83p -3.70%
Provident Financial (PFG) 357.50p -3.43%
Polypipe Group (PLP) 392.20p -2.78%
Diploma (DPLM) 1,420.00p -2.74%