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London open: FTSE rallies as wage data raises rate cut expectations
London stocks rose in early trade on Tuesday as a further easing of UK wage growth raised rate cut expectations.
At 0840 GMT, the FTSE 100 was up 0.8% at 7,728.6.
Data released earlier by the Office for National Statistics showed that wage growth slowed again in the three months to January, while the unemployment rate ticked higher.
Average regular pay growth excluding bonuses was 6.1%, down from 6.2% in the previous quarter. This marked the slowest growth in more than a year but was in line with expectations.
Real regular wages, which take into account consumer price inflation, were up 2%. This was the highest since the summer of 2019.
The unemployment rate edged up to 3.9% in the three months to January from 3.8%, versus expectations for it be unchanged.
The data also showed that the number of vacancies fell again, from 928,000 in the three months to January to a 32-month low of 908,000 in the three months to February.
ONS director of economist statistics Liz McKeown said: “Recent trends in the jobs market are continuing, with earnings, in cash terms, growing more slowly than recently but, thanks to lower inflation, real-terms pay continues to increase.
“The number of job vacancies has also been falling for coming up to two years, though the total remains more than 100,000 above its pre-pandemic level.
“Over the last year, there was little change in the proportions of people who are employed, unemployed or neither working nor looking for work, though the overall number of people in work is still rising.”
Kathleen Brooks, research director at XTB, said the slowdown in wage growth “has caused traders to reassess their bet that the Bank of England will delay cutting rates until August, and there are growing expectations that the first BOE rate cut will come in June, and that there will be three cuts from the Bank this year”.
Still to come on the macro front, all eyes will be on the US consumer price index at 1330 GMT.
Matt Britzman, equity analyst at Hargreaves Lansdown, said: “Markets are looking for a monthly gain of 0.4% and a headline annual figure of 3.1%. There’s not expected to be a cut in US rates until the June meeting, and even that remains on a knife edge. For now, the fact rates will come down at some point seems enough to keep markets happy. But if expectations continue to get pushed back investors will need to face a higher for longer reality.”
In equity markets, interdealer broker TP ICAP surged as it posted better-than-expected full-year profits, announced a £30m share buyback and confirmed it was exploring options for its data business Parameta Solutions which could include a potential IPO of a minority stake.
On the downside, housebuilder Persimmon slumped as it warned of continuing tough markets and reported a worse-than-expected 52% decline in full-year profits. Pre-tax profit for the year to December plunged to £351.8m, missing estimates of £359.5m.
Pizza chain Domino’s fell even as it reported increased profit, cashflow and shareholder returns in 2023 on the back of solid organic growth, as it announced plans to open 70 new stores in 2024 and hit £2bn in sales within four years.
Pets at Home lost ground after the UK’s Competition and Markets Authority said it had provisionally decided to launch a formal market investigation after a review into the veterinary industry found that pet owners could be paying too much for medicines or prescriptions.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Prudential Plc | +3.07% | +24.20 | 812.40 |
| 2 |  |
Standard Chartered Plc | +2.24% | +14.80 | 674.80 |
| 3 |  |
Hsbc Holdings Plc | +2.17% | +12.50 | 588.30 |
| 4 |  |
Barclays Plc | +1.97% | +3.42 | 177.22 |
| 5 |  |
Intercontinental Hotels Group Plc | +1.62% | +132.00 | 8,300.00 |
| 6 |  |
Bae Systems Plc | +1.51% | +19.00 | 1,279.00 |
| 7 |  |
Smurfit Kappa Group Plc | +1.50% | +50.00 | 3,390.00 |
| 8 |  |
Lloyds Banking Group Plc | +1.41% | +0.69 | 49.74 |
| 9 |  |
Anglo American Plc | +1.30% | +24.00 | 1,874.80 |
| 10 |  |
Bp Plc | +1.26% | +5.95 | 477.65 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Persimmon Plc | -3.56% | -49.00 | 1,325.50 |
| 2 |  |
Sse Plc | -1.18% | -19.00 | 1,594.00 |
| 3 |  |
Barratt Developments Plc | -1.05% | -5.00 | 473.30 |
| 4 |  |
Tui Ag | -0.61% | -3.50 | 567.50 |
| 5 |  |
Mondi Plc | -0.44% | -6.00 | 1,343.50 |
| 6 |  |
Croda International Plc | -0.30% | -14.00 | 4,726.00 |
| 7 |  |
Johnson Matthey Plc | -0.21% | -3.50 | 1,679.50 |
| 8 |  |
Severn Trent Plc | -0.15% | -4.00 | 2,607.00 |
| 9 |  |
National Grid Plc | -0.09% | -1.00 | 1,053.50 |
| 10 |  |
Taylor Wimpey Plc | -0.07% | -0.10 | 139.30 |
US close: Stocks rangebound as traders sit tight ahead of CPI report
Wall Street’s three main equity indices finished mixed on Monday with markets rangebound ahead of a key reading of inflation that has the potential to the market-moving.
The Dow finished 0.12% higher, rebounding slightly after its worst week since October last week; the S&P 500 fell 0.11%, falling for the second straight session after hitting a fresh record last week, with investors continuing to take profits after an 8% surge so far this year; while the Nasdaq Composite slipped 0.41%.
Stephen Innes, managing partner at SPI Asset Management, said traders “appeared to be sitting on their hands” on Monday, showing a lack of motivation to push the recent rally any further. And with no major economic data to act as a catalyst, all eyes were looking ahead to Tuesday’s consumer-price index (CPI) release.
Analysts widely expect headline inflation to have held steady at an annual rate of 3.1% in February, staying at its 2021-lows, though core inflation should have eased to 3.7% from 3.9%.
Market participants were also bracing themselves for February’s producer price index reading due out on Thursday – some of the last major macro figures before the Federal Reserve meets for their next monetary policy meeting next week.
“An inflation test looms before the next Federal Reserve gathering, which could sway guidance. It is imperative to avoid a repeat of the last CPI release. Another report similar to January’s could raise doubts about the Fed’s rate cut wisdom in 2024. If the inflation dragon shows up again, it will not sit well with risk appetite,” Innes said.
Market movers
Facebook parent company Meta traded 4% lower after former president Donald Trump branded the firm an “enemy of the people” in comments around a hypothetical ban of social media rival TikTok. “I think Facebook has been very bad for our country, especially when it comes to elections,” Trump said.
Natural gas group EQT underwhelmed the market with its plans to buy Equitrans Midstream, a company it used to own, for $5.5bn in stock, sending shares down 8%.
Bally’s was a big mover, jumping 28% after Standard General offered $15 a share to buy the 77% remaining stake it doesn’t already own that values the casino operator at around $680m.
A bunch of chip stocks were providing a drag, with Nvidia among them as its recent decline continues; AMG and Lam Research also fell sharply.
Tuesday newspaper round-up: Thames Water, Telegraph, Xlinks
Thames Water has been accused of “misleading” customers after telling them that just a few pennies in every pound spent on their bills is paid to its lenders. The debt-laded firm is Britain’s biggest water company, serving 16 million customers in London and the south-east of England. It has sent a breakdown of its costs in bills to customers, including spending 48p of every pound on infrastructure, 20p on the supply and treatment of water, and 3p to its lenders. – Guardian
Rishi Sunak risks further criticism from green campaigners after throwing his weight behind the building of new gas-fired power stations, saying he will “not gamble with our energy security”. The government will on Tuesday announce a plan to increase gas power capacity by providing extra certainty to investors that plants have a long-term future, even as Britain moves away from fossil fuels. – Guardian
Nearly four million people are at risk of abandoning work permanently amid a post-lockdown surge in benefits paid to claimants who do not have to find a job. Policy in Practice warned there had been a “marked” post-pandemic shift in welfare that was moving people away from seeking employment, with 3.9 million now receiving out-of-work benefits without having to even look for a job – twice as many as the number of claimants who must try to find work. – Telegraph
Rupert Murdoch and the owner of The Daily Mail have reportedly held talks about a potential joint takeover of The Telegraph alongside UAE-backed RedBird IMI, as opposition to its solo bid hardens. Mr Murdoch’s News UK and DMGT, which owns the Daily Mail, have held talks about putting money into the bid, Bloomberg reported, in a move that would dilute UAE money in the takeover. – Telegraph
The company behind a multibillion-pound project to export power from Morocco is considering an option to transmit electricity to Germany instead of Britain. Xlinks, whose leaders include Sir Dave Lewis, the former Tesco chief executive, plans to build 4.5 gigawatts of wind farms and 7GW of solar farms in the Moroccan desert, together with 5GW of battery storage capacity. – The Times
Coca-Cola UK, Formula One Marketing and Reckitt are among “a rogues’ gallery” of the slowest payers to small businesses in Britain, taking an average of more than 110 days to pay their invoices. Research by Good Business Pays, which campaigns for the fairer treatment of suppliers, analysed public filings from more than 5,000 companies to identify slow and late payers. – The Times
