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London open: Stocks edge down after jobs data, ahead of US inflation
London stocks edged lower in early trade on Tuesday as investors mulled UK jobs data and eyed the latest US inflation report.
At 0845 GMT, the FTSE 100 was down 0.2% at 7,414.42.
Figures released earlier by the Office for National Statistics showed that wage growth eased in the three months to September, but earnings growth outstripped inflation, while the unemployment rate was unchanged.
Average wage growth including bonuses fell to 7.9% from an upwardly-revised 8.2.% the month before. This compares to inflation of 6.7%. Economists were expecting wage growth including bonuses to fall to 7.4%.
Excluding bonuses, wage growth eased to 7.7% in the three months to September, from 7.8%. This was still among the highest annual growth rates since comparable records began in 2001, the ONS said.
Meanwhile, the unemployment rate was steady at 4.2%.
The data also showed that in August to October, the estimated number of vacancies fell by 58,000 on the quarter to 957,000. Vacancies declined in 16 of the 18 industry sectors.
In addition, the number of payrolled employees was estimated to have increased by 33,000 on the September figure, to 30.2m. The data for September was revised from a decrease of 11,000 to an increase of 32,000.
ONS director of economic statistics, Darren Morgan, said: “Our labour market figures show a largely unchanged picture, with the proportions of people who are employed, unemployed or who are neither working nor looking for a job all little changed on the previous quarter.
“The number of job vacancies fell for the 16th straight month. Nevertheless, vacancies still remain well above their pre-pandemic levels.
“With inflation easing in the latest quarter, real pay is now growing at its fastest rate for two years.”
Looking ahead to the rest of the day, market participants were awaiting the release of the US consumer price index for October at 1330 GMT.
Tickmill Group said: “The upcoming US consumer price index (CPI) data is anticipated to be a key release for global financial markets, closely observed for insights into the interest rate outlook. Forecasts indicate a decline in annual headline inflation for October, primarily attributed to the recent decrease in oil prices and its ripple effect on gasoline prices.
“The prediction suggests a drop to 3.3% from the 3.7% recorded in September, marking the lowest rate in three months, though not a new low for the year. In contrast, core inflation, which excludes volatile food and energy prices, is expected to remain stable at 4.1%.
“Despite a notable decline earlier in the year, the recent months have seen a slowdown in the improvement of core inflation. This deceleration is particularly evident in service sector inflation, indicating a level of persistence in certain components of the inflationary landscape. The CPI data will be closely scrutinised for its implications on monetary policy and the broader economic environment.”
In equity markets, there was another deluge of releases.
Vodafone was on the back foot as it reiterated full-year guidance but reported a 4.3% drop in half-year group revenues and a 44% decline in operating profits.
Tobacco and vaping giant Imperial Brands edged down as it said full-year revenues were flat as lower tobacco volumes were offset by strong growth in next-generation products (NGP).
M&G was knocked lower by a downgrade to ‘sector perform’ from ‘outperform’ at RBC Capital Markets.
On the upside, events organiser Informa surged as it lifted its full-year profit and revenue expectations, hailing continuing strong growth across its portfolio.
Mining and commodities company Glencore was a high riser after saying it was spending $6.9bn to buy a 77% stake in Teck Resources‘ steelmaking coal business in Canada’s Rocky Mountains, Elk Valley Resources (EVR). Miners more generally were in the black, with Anglo American, Antofagasta and Rio Tinto all up.
Oxford Instruments rallied as it posted a jump in first-half profit, revenue and the order book, with “particularly good” growth in Research & Discovery.
Aerospace and defence firm Babcock gained as it backed its full-year expectations, reported a rise in first-half revenue and profit, and reinstated its dividend.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Dcc Plc | +6.19% | +289.00 | 4,955.00 |
| 2 |  |
Informa Plc | +6.01% | +42.20 | 744.20 |
| 3 |  |
Glencore Plc | +3.25% | +14.00 | 444.45 |
| 4 |  |
Anglo American Plc | +2.07% | +42.00 | 2,073.50 |
| 5 |  |
Ocado Group Plc | +1.95% | +10.00 | 522.80 |
| 6 |  |
British Land Company Plc | +1.63% | +5.20 | 324.70 |
| 7 |  |
Spirax-sarco Engineering Plc | +1.29% | +110.00 | 8,652.00 |
| 8 |  |
Segro Plc | +1.09% | +8.40 | 775.80 |
| 9 |  |
Johnson Matthey Plc | +0.98% | +15.00 | 1,548.00 |
| 10 |  |
Persimmon Plc | +0.94% | +11.00 | 1,181.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Smith (ds) Plc | -1.78% | -5.30 | 292.00 |
| 2 |  |
British American Tobacco Plc | -1.10% | -28.00 | 2,514.50 |
| 3 |  |
Vodafone Group Plc | -0.96% | -0.74 | 76.66 |
| 4 |  |
Mondi Plc | -0.89% | -12.50 | 1,387.50 |
| 5 |  |
Shell Plc | -0.85% | -22.50 | 2,634.00 |
| 6 |  |
Smurfit Kappa Group Plc | -0.78% | -22.00 | 2,788.00 |
| 7 |  |
Hargreaves Lansdown Plc | -0.75% | -5.40 | 714.00 |
| 8 |  |
Intercontinental Hotels Group Plc | -0.74% | -44.00 | 5,912.00 |
| 9 |  |
Flutter Entertainment Plc | -0.72% | -90.00 | 12,325.00 |
| 10 |  |
Centrica Plc | -0.63% | -0.95 | 150.80 |
US close: Stocks mixed ahead of Tuesday’s CPI data
US stocks finished well off their daily lows on Monday but the major equity indices still put in a mixed performance as investors choose to remain cautious ahead of key inflation data.
The Dow Jones Industrial Average rose 0.16%, while the S&P 500 fell 0.08% and the Nasdaq declined 0.22%. That follows some impressive gains on Wall Street last Friday, which saw the Nasdaq surge 2.05% – its biggest one-day gain since May – the Dow rise 1.2% and the S&P 500 jump 1.6%.
The consumer price index, due out at 0830 ET on Tuesday, is expected to show that annual inflation slowed to 3.3% in October from 3.7% the month before. However, core inflation (which excludes volatile items like food and energy) is forecast to remain at September’s level of 4.1% – still firmly above the Federal Reserve’s 2% target.
“Two things will be important this month. The first will be the decline in gasoline prices driven by lower oil and gasoline cracks. This will impact headline inflation but not core. The second is the increase in medical care services, which could shift core inflation higher by 5-10 bps,” said analysts at research firm Macro Hive in an email.
Month-on-month, core inflation is widely expected to stay at 0.3%, though analysts at Pantheon Macroeconomics are predicting a print of 0.4%.
“If the core is 0.4%, Treasury yields will rise, the market-implied chance of a December rate hike will increase, perhaps sharply, and stocks probably will sell off. We’re sticking to our view that the Fed won’t hike next month, but we have always thought the risk is not negligible,” Pantheon said in a research note.
Fed chair Jerome Powell – along with other policymakers – delivered somewhat hawkish comments last week, saying that the central bank wouldn’t hesitate to tighten monetary policy further to bring inflation down towards the target.
Also weighing on investors’ minds on Monday was yet another potential government shutdown, with Congress having just four days left to pass a new stop-gap bill before the current one runs out on 17 November. Speaker Mike Johnson unveiled a new proposal at the weekend to push funding into January, but measures faced opposition from both parties. On Friday, ratings agency Moody’s cut its rating outlook on the US economy from ‘stable’ to ‘negative’.
Boeing jumps on order optimism
Boeing shares were flying 4% higher on reports that China might call an end to its four-year suspension of Boeing 737 Max airlines ahead of Joe Biden’s meeting with Xi Jinping’s at the APEC summit this week. The aeroplane manufacturer also announced a batch of new orders from the sidelines of the Dubai airshow, including a $52bn order of 95 aircraft from Emirates.
Electric car maker Tesla finished higher on the news that it won’t allow buyers of its Cybertrucks to sell them within the first year of ownership without a $50,000 fine.
Food products group Tyson Foods dropped after missing estimates with its fourth-quarter sales and guided to flat revenues for the upcoming year.
Tuesday newspaper round-up: Avon, Google, OBR
Ministers have come under further pressure to expand the financial support for Britons struggling with the cost of living crisis, after a committee of MPs found some had “slipped through the safety net”. The cross-party work and pensions committee said that support payments designed to help people cope with soaring household bills had proved insufficient to meet the scale of the problem and offered only a “short-term reprieve” for many. – Guardian
Avon, the beauty company famous for building a global business by making house-to-house visits, is to open its first physical UK stores in its 137-year history. The company, known for its “ding dong! Avon calling” slogan used in its ads and by doorstep sales representatives, has had to strategically rethink its business model after its 5 million reps had to stop making Avon house calls during the Covid pandemic. – Guardian
Google gives Apple a 36pc cut of advertising revenue from its searches made in its Safari browser, a court has heard. The previously unknown figure was supposed to remain confidential but was revealed on Monday during the antitrust trial against Google, where it stands accused of illegally maintaining its monopoly. – Telegraph
One of the biggest providers of sustainability ratings appears to give higher rankings to companies that generate better stock market returns, raising concerns that there are conflicts of interest at play in the booming industry. Joachim Klement, an investment strategist at Liberum, a stockbroker, said on Monday that there may be “monetary conflicts of interest at play” in the burgeoning but opaque industry of providing environmental, social and governance (ESG) ratings. – The Times
The top official at the Office for Budget Responsibility has hit back at critics by insisting that the spending watchdog takes into account all costs and benefits when examining changes to fiscal policy, and that it is unfair to claim it does not. Professor David Miles, a member of the OBR’s budget responsibility committee, said it was fair to query whether the group accurately captured shifts in consumer and business behaviour in response to tax and spending decisions. – The Times
