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(Alliance News) - The UK unemployment rate held steady in June, despite the biggest jump in people out of work in over a decade, with many workers electing not to actively seek employment, the Office for National Statistics said Tuesday.
The UK unemployment rate in the three months to June was 3.9%, unchanged from the three months to May, the ONS said. The market consensus forecast, cited by FXStreet, was for a rise to 4.2%.
The ONS said that in July 730,000 fewer people were in paid employment when compared with March and 114,000 fewer when compared with June. The decrease in employment in the quarter to June was the largest quarterly decrease since May to July 2009, the ONS said.
Explaining why the jobless rate has remained flat, the ONS said that to be counted among the unemployed, workers need to be actively looking for a new job, which many have decided not to do yet.
Average earnings including bonuses in June fell 1.2%, following a 0.3% fall in the three months to May. The reading missed market forecasts for a fall of 1.1%.
In addition, average earnings excluding bonuses fell 0.2% in June, following growth of 0.7% in May. The figure missed the consensus estimate for an 0.1% decrease.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 1.0% at 6,108.85
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Hang Seng: up 1.9% at 24,830.80
Nikkei 225: closed up 1.9% at 22,750.24
DJIA: closed up 357.96 points, or 1.3%, at 27,791.44
S&P 500: closed up 9.19 points, or 0.3%, at 3,360.47
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GBP: down at USD1.3061 (USD1.3083)
EUR: down at USD1.1728 (USD1.1761)
Gold: down at USD1,998.02 per ounce (USD2,033.00)
Oil (Brent): firm at USD45.04 a barrel (USD44.84)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
1100 CEST Germany ZEW economic sentiment indicator
0830 EDT US producer price index
1630 EDT US API weekly statistical bulletin
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The Bank of England could expand its quantitative easing programme if needed, Monetary Policy Committee member and deputy governor for markets and banking Dave Ramsden told The Times in an interview. The pace of purchases under the QE programme would accelerate if "we saw signs of [market] dysfunction", he said, adding the central bank has "significant headroom to do more QE".
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Hong Kongers rushed to buy pro-democracy newspaper Apple Daily in a show of support for its owner, who was arrested a day earlier as police rounded up critics of China. A crackdown on dissent in Hong Kong has gathered pace since China imposed a sweeping security law in June, with opposition politicians disqualified and activists arrested for social media posts. The moves have provoked outrage in the West and fear for millions who last year took to the streets to protest communist China's tightening grip on the semi-autonomous city. In one of the most dramatic days of the crackdown, media tycoon Jimmy Lai was among 10 people detained under the new law on Monday as around 200 police officers searched the newsroom of his tabloid, which is unapologetically critical of Beijing.
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The IMF is too gloomy in its outlook for US growth and oversteps its mandate in calling for Washington to reshape the American economy, a US official said. In its annual review of the US economy, the fund said Washington has the financial firepower to fix the health care system, better support poor families with improved aid programs and tax credits, and improve jobless benefits to include self-employed workers. Mark Rosen, US representative to the fund's board, said he agrees the government has ample resources available to deal with the pandemic. "Our authorities disagree, however, that they should use available fiscal space to 'broadly remake' the US economy." He faulted the IMF for veering into social issues, saying "this dynamic detracts from the usefulness and impact of the report." In the initial summary released July 17, the IMF staff predicted a 6.6% contraction of American GDP this year compared to 2019, and 3.9% growth in 2021, but Rosen called that "too pessimistic"."
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BROKER RATING CHANGES
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MORGAN STANLEY RAISES HSBC TO 'EQUAL-WEIGHT' (UNDERWEIGHT)
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JPMORGAN RAISES FERREXPO TO 'NEUTRAL' ('UNDERWEIGHT') - TARGET 240 (150) PENCE
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JEFFERIES RAISES ELEMENTIS TO 'BUY' ('HOLD') - TARGET 95 (75) PENCE
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COMPANIES - FTSE 100
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InterContinental Hotels Group scrapped its dividend as the hotel operator said the damage caused by the coronavirus crisis to trading has been substantial. For the half-year ended June 30, revenue almost halved to USD1.25 billion from GBP2.28 billion last year as the company swung to a pretax loss of USD275 million from a profit of USD375 million last year. Global revenue per available room - a key metric in the hotel industry - declined by 52% in the first half and was down 75% in the second quarter, as occupancy at comparable hotels fell to 25%. IHG said an interim dividend in respect of 2020 will not be paid, having paid a dividend of 39 US cents last year. The company said it will continue to defer consideration of further dividends until "visibility of the pace and scale of market recovery has improved". Looking ahead, IHG said "small but steady" improvements in occupancy and RevPAR through the second quarter continued into July, with an expected RevPAR decline of 58%, and occupancy rising to around 45%.
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Unilever may have to scrap unification plans if a Dutch tax proposal goes ahead, to avoid the resulting EUR11 billion exit tax charge, it said in its prospectus for the corporate reorganisation on Monday. The private member's bill was introduced by a member of the Dutch House of Representatives for GroenLinks, a Dutch opposition party. According to Anglo-Dutch consumer goods giant Unilever, enacting the bill in its present form - should it apply to unification - could result in a hefty EUR11 billion charge. Unilever is intending to unite the company's legal structure under a single parent company, Unilever PLC, a move set to complete over the weekend of November 21 and 22. However, Unilever's prospectus said: "Proceeding with unification, if it resulted in an exit tax charge of some EUR11 billion, would not be in the best interests of Unilever, its shareholders and other stakeholders as a whole." The warning in Unilever's prospectus was first reported by the Telegraph newspaper late Monday.
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COMPANIES - FTSE 250
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Contracts-for-difference trading provider Plus500 said it delivered an "outstanding performance" in the first half across all metrics, resulting in significant shareholder returns. For the half-year ended June 30, revenue multiplied to USD564.2 million, from USD148.0 million last year and pretax profit to USD363.2 million from USD63.9 million the year before. Plus500 said customer deposits more than doubled to USD1.65 billion from USD467.1 million last year. The online trading company declared a dividend of USD0.9531, up substantially from USD0.2734 last year. In light of the strong performance, Plus500 approved a new programme to buy back up to an additional USD67.3 million of the company's shares, having completed the purchase of USD38.9 million in the first half.
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Wealth management firm Quilter reported a decline in profit and revenue for the first half of 2020, due to mostly external conditions including lower markets. For the six months to the end of June, adjusted pretax profit dropped by 38% to GBP71 million from GBP115 million for the same period a year before. This was on revenue that declined by 4% to GBP335 million from GBP348 million, due to the Covid-19 pandemic and its impact on equity markets. Assets under management & administration slipped 2.7% to GBP107.4 billion as at June 30 from GBP110.4 billion at the end of December, driven by negative market movements, mainly from the FTSE 100 index being 18% lower for the period. However, Quilter reported positive net client cash flow of GBP1.1 billion, more than tripled from around GBP300 million a year before, as lower outflows more than offset a 3.3% fall in gross sales of GBP5.8 billion from GBP6.0 billion. Quilter declared an interim dividend of 1.0 pence, down 41% from 1.7p the prior year.
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Tuesday's Shareholder Meetings
no events scheduled
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
