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London open: FTSE nudges lower as Ocado tumbles
London stocks nudged lower in early trade on Tuesday as the latest UK jobs data showed that wages grew at their fastest pace in more than 20 years in the three months to November, adding pressure on the Bank of England to hike rates.
At 0910 GMT, the FTSE 100 was down 0.1% at 7,853.65.
Figures released earlier by the Office for National Statistics showed that regular pay, excluding bonuses, was up 6.4% on an annual basis. Excluding the Covid pandemic, this marks the biggest jump since records began in 2001.
Adjusted for inflation, however, wages were down 2.6%.
The figures also showed that the unemployment rate ticked up to 3.7% in the three months to November, from 3.5% in the previous quarter.
In addition, the number of job vacancies declined by 75,000 in October to December versus the previous three months.
Ashley Webb, UK economist at Capital Economics, said: “Consistent with the economy proving to be more resilient than expected, November’s labour market data show that conditions remain tight and wage growth stayed strong.
“This will only add further weight to the case for the Bank of England to raise interest rates from 3.50% now, perhaps to 4.50% in the coming months.”
Also weighing on the mood was the release of data showing that China’s economy slowed in 2022 to one of its worst levels in nearly 50 years.
In equity markets, Ocado was the worst performer on the FTSE 100 after it said that fourth-quarter sales at Ocado Retail – its 50:50 joint venture with Marks & Spencer – were more or less flat as customers shopped less and bought fewer items.
Retail revenues nudged up just 0.3% versus the same quarter a year earlier, coming in below the company’s guidance for mid-single digit sales growth.
Quilter slid after a downgrade to ‘underweight’ at JPMorgan, while credit-checking firm Experian fell despite reporting a jump in third-quarter revenues.
On the upside, recruiter Hays gained after it posted an 8% increase in second-quarter fees.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Sse Plc | +1.93% | +32.50 | 1,715.00 |
| 2 |  |
Hiscox Ltd | +1.66% | +18.00 | 1,103.00 |
| 3 |  |
Tui Ag | +1.45% | +2.55 | 178.50 |
| 4 |  |
3i Group Plc | +1.04% | +15.00 | 1,455.50 |
| 5 |  |
Bhp Group Limited | +1.01% | +28.00 | 2,793.00 |
| 6 |  |
Bae Systems Plc | +0.84% | +7.00 | 838.60 |
| 7 |  |
Bt Group Plc | +0.65% | +0.85 | 131.15 |
| 8 |  |
Dcc Plc | +0.64% | +29.00 | 4,538.00 |
| 9 |  |
National Grid Plc | +0.64% | +6.50 | 1,028.50 |
| 10 |  |
Centrica Plc | +0.62% | +0.60 | 97.08 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -5.84% | -47.20 | 760.80 |
| 2 |  |
Carnival Plc | -2.03% | -16.20 | 783.60 |
| 3 |  |
Berkeley Group Holdings (the) Plc | -2.02% | -90.00 | 4,367.00 |
| 4 |  |
Hikma Pharmaceuticals Plc | -1.45% | -25.00 | 1,695.50 |
| 5 |  |
Unilever Plc | -1.30% | -55.00 | 4,175.00 |
| 6 |  |
Sage Group Plc | -1.30% | -10.00 | 761.80 |
| 7 |  |
Experian Plc | -1.22% | -36.00 | 2,919.00 |
| 8 |  |
Wpp Plc | -0.91% | -8.60 | 932.20 |
| 9 |  |
Easyjet Plc | -0.86% | -3.80 | 438.10 |
| 10 |  |
Itv Plc | -0.77% | -0.62 | 79.78 |
US close: Stocks rise as consumer inflation cools in December
Wall Street trading finished in positive territory on Thursday, as investors digested last month’s all-important consumer price index.
At the close, the Dow Jones Industrial Average was up 0.64% at 34,189.97, as the S&P 500 added 0.34% to 3,983.17 and the Nasdaq Composite was 0.64% firmer at 11,001.10.
The Dow closed 216.96 points higher on Thursday, extending the gains it recorded in Wednesday’s session.
“While the job picture remains strong, the Fed will be pleased to see that the inflation outlook is getting better too,” said IG chief market analyst Chris Beauchamp.
“Steady declines in the rate of price increases might not be too much comfort for consumers, but they are music to the ears of stock investors.
“For the dollar, however, it sets the scene for further declines, continuing the trend from the end of last year.”
December’s CPI print was in focus, with the data revealing that the cost of living in the US had slipped a tad more than expected last month.
According to the Department of Labor, the annual rate of headline consumer prices fell from 7.1% for November to 6.5% in December, beating consensus estimates for a print of 6.6%.
At the core level, which strips out the volatile food and energy components, CPI was up by 5.7% year-on-year, versus 6.0% in the month before and in line with economists’ forecasts.
Investors would be using the report to assess the outlook for the Federal Reserve’s rate-hiking campaign, with declining inflation likely to lead the central bank to halt its rate-rising campaign in the spring.
Elsewhere on the macro front, Americans filed unemployment claims at a decelerated clip in the seven days ended 7 January, hitting their lowest level in more than three months.
According to the Labor Department, initial jobless claims fell by 1,000 to 205,000, well and truly short of the 215,000 figures expected on the Street, adding to recent evidence of a tight labour market.
In equities, floundering retailer Bed Bath & Beyond rocketed 50.14%, extending the meme stock’s gains after it recorded its biggest single-day rise ever on Wednesday.
Walt Disney was ahead 3.61% after it announced Nike executive chairman Mark Parker would become its new chairman.
American Airlines Group ascended 9.71% after saying it expected profits to rise further in the fourth quarter.
The other legacy carriers were in the green as well, with Delta Air Lines up 3.72% and United Airlines 7.52% firmer.
Tuesday newspaper round-up: Energy bills, ULEZ, Aveva
Jeremy Hunt is facing calls for a “social energy tariff” providing cheaper gas and electricity for low income households to be introduced when government support ends next year. In an open letter to the chancellor, 95 charities and non-profit organisations have urged the government to move quickly to legislate for a change in energy bills for “those in greatest need to ensure they are able to live in their homes comfortably”. – Guardian
Britain risks losing vital investment if it keeps raising taxes and undermining its reputation as a stable place to do business, global bosses have warned. PwC’s annual poll of more than 4,000 chief executives showed the UK climbed one place this year to become the third most important country globally for growth, alongside Germany. – Telegraph
Sadiq Khan has been accused of manipulating a public consultation on expanding London’s Ultra-low emission zone (Ulez) after it emerged that more than 5,000 votes were excluded. Emails reveal the Mayor’s officials removed thousands of votes submitted to a consultation on whether to expand Ulez across the whole of London. The crackdown on motorists is costing drivers in the capital an additional £385,000 a day in charges, according to RAC. – Telegraph
The boss of Aveva has reiterated that the FTSE 100 technology company will remain autonomous as its controversial £10 billion takeover by France’s Schneider Electric was formally sealed. Peter Herweck, chief executive of Aveva, said that the company would continue to work with a variety of partners and control systems. “It is a clear agreement that we have done. We’ve been very, very clear about it. We will be agnostic,” he said. – The Times
The global airline industry will be back at prepandemic levels by the middle of this year. That is the bullish assessment of Avolon, one of the world’s largest aircraft leasing companies. The forecast is the most optimistic estimate yet for a recovery in the industry from the Covid-19 travel restrictions of 2020 to 2022. – The Times
