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(Alliance News) - Stocks in London were called flat on Tuesday, as investors weighed shock UK labour market data.
The pound climbed above the USD1.29, after higher-than-expected UK wage inflation figures. However, the morning's labour data is likely to be considered something of a "mixed bag", with unemployment rising unexpectedly to 4.0%.
Sterling was also benefitting from a weak dollar, as well as hawkish rhetoric from the head of the Bank of England and the UK's chancellor.
In early company news, Centrica announced a USD8 billion sale and purchase agreement for liquefied natural gas. AIM-listed STM Group said it has received a takeover approach at a hefty premium to its current share price.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 3.0 points at 7,276.79
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Hang Seng: up 1.3% at 18,715.70
Nikkei 225: closed up 13.84 points at 32,203.57
S&P/ASX 200: closed up 1.5% at 7,108.90
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DJIA: closed up 209.52 points, 0.6%, at 33,944.40
S&P 500: closed up 0.2% at 4,409.53
Nasdaq Composite: closed up 0.2% at 13,685.48
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EUR: up at USD1.1013 (USD1.0984)
GBP: up at USD1.2905 (USD1.2828)
USD: down at JPY140.81 (JPY141.52)
Gold: up at USD1,928.86 per ounce (USD1,923.22)
Oil (Brent): down at USD78.17 a barrel (USD78.48)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
11:00 CEST Germany ZEW indicator of economic sentiment
08:55 EDT US Johnson Redbook retail sales index
16:30 EDT US API weekly statistical bulletin
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The UK jobless rate unexpectedly rose to 4.0% in the three months to May. Market consensus, as cited by FXStreet, had expected it to remain unchanged from 3.8% in the three months to April. In the three months to May, annual growth in average total pay, including bonuses, accelerated to 6.9% from an upwardly-revised reading of 6.7% in the previous three-month period. May's figures topped FXStreet-cited consensus of 6.8%. Excluding bonuses, average earnings rose 7.3%, matching the upwardly revised figure for the previous month. This was above the consensus of 7.1%.
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UK retail sales increased by almost 5% in June, although this masked a large drop in volumes after accounting for inflation, numbers showed. The British Retail Consortium on Tuesday said total retail sales increased by 4.9% in the five weeks from May 28 to July 1, having decreased 1.0% during the same period in 2022. This was above the three-month average growth of 4.6% and the 12-month average growth of 4.0%. "The sun was shining on retailers in June, with the warm weather bringing consumers back out to the high street," said KPMG UK Head of Retail Paul Martin. "Sales of suntan lotion, food and clothing were all given a boost as consumers made the most of the record June temperatures."
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Prime Minister Rishi Sunak will head to the Nato summit in Lithuania with a renewed call for all members of the alliance to commit to spending 2% of their gross domestic product on defence. Sunak will tell allies in Vilnius that plans to make Nato's armed forces "more lethal and more deployable" start with "meeting the 2% commitment". Downing Street said that last year, fewer than half of those in the alliance were meeting the expenditure target in relation to their national GDP — a measure of the health of an economy — with nine out of 30 members spending at least 2%.
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Bank of England Governor Andrew Bailey has vowed that the central bank must "see the job through" to quickly bring inflation back down. Bailey will stress that "unacceptably high" inflation is currently his "pre-occupation", in a speech set to be delivered to finance industry bosses and the chancellor at London's Mansion House. "As you will understand, my pre-occupation at the moment is inflation," Bailey said. "It is crucial that we see the job through, meet our mandate to return inflation to its 2% target, and provide the environment of price stability in which the UK economy can thrive.
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UK Chancellor Jeremy Hunt unveiled plans to channel more of the nation's pension fund cash into UK companies and boost the inflation-battered economy. Hunt trumpeted a deal with major pension firms to put 5% percent of investments – or up to GBP50 billion, or USD64 billion, by 2030 – into high-growth businesses, in turn boosting economic activity and tax revenues that fund public services. "I want to... enable our financial services sector to increase returns for pensioners, improve outcomes for investors and unlock capital for our growth businesses," Hunt told an audience of finance leaders at London's Mansion House in the heart of its City financial district. Hunt added that the UK's pension market was the largest in Europe and worth more than GBP2.5 trillion.
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BROKER RATING CHANGES
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Panmure starts Redde Northgate with 'buy' - price target 500 pence
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COMPANIES - FTSE 100
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British Gas parent company Centrica said it signed a USD8 billion long-term sale and purchase agreement for 1.0 million tonnes per annum of liquefied natural gas on a "free on board" basis at the Delfin Deepwater Port. The port is located off the coast of the US state of Louisiana. Centrica will see around 14 LNG cargoes each year, which would be enough to heat 5% of UK homes for 15 years.
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COMPANIES - FTSE 250
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Crest Nicholson announced its finance director, Duncan Cooper, will step down next year to take up the role as CFO at "another larger listed company". He will continue in his role until January, and the firm has begun a process to find his replacement.
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Ahead of its annual general meeting, British Land said it was continuing to see "strong operational momentum", despite macroeconomic uncertainty. "Campuses are benefiting from the trend towards best in class space, while retail parks continue to be the winning retail format given their affordability, omni-channel compatibility and low capex requirements," the real estate investor said.
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OTHER COMPANIES
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STM Group said it has agreed on the terms of a possible cash takeover offer from Pension SuperFund Capital. The offer would be for 70 pence per share, which would be two and half times its closing price of 27.90p on Monday. The London-based cross border financial services provider's board said it would be "minded to recommend" the offer unanimously to shareholders, if a firm offer is made. STM said it has given Pension SuperFund Capital access to due diligence materials.
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By Elizabeth Winter, Alliance News senior markets reporter
Comments and questions to newsroom@alliancenews.com
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