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(Alliance News) - Stocks in London opened mostly lower on Tuesday morning as the latest UK unemployment data showed signs of a cooling jobs market, though not by enough to forestall further interest rate hikes.
The FTSE 100 index opened up 4.04 points, 0.1%, at 7,389.21. The mid-cap FTSE 250 was down 55.92 points, or 0.3%, at 19,566.33, and the AIM All-Share was down 1.86 points, 0.2%, at 849.69.
The Cboe UK 100 was up 0.1% at 739.37. The Cboe UK 250 was down 0.2% at 16,890.72. The Cboe Small Companies was flat at 13,012.36.
Britain's rate of unemployment edged higher in the three months to September as the country heads for what is feared will be the longest recession in a century.
The rate of unemployment stood at 3.6% in the three months to September, up from 3.5% in the three months to August, the Office for National Statistics said.
It came as more people dropped out of the workforce, with a hike in the proportion of people neither looking for work nor working.
Wage rises continued to be far outstripped by rocketing inflation, with average earnings with bonuses stripped out down 3.8% when compared with the consumer price index, the figures showed.
"Whichever way you look at it, this isn't a great report and it will likely keep the pressure on the BoE to keep hiking aggressively, creating further headwinds for the economy," said Craig Erlam, market analyst at Oanda.
Francesco Pesole at ING agreed: "Reduced labour supply remains a bigger concern, especially as long-term sickness numbers continue to rise. Our economics team continues to expect a 50 [basis point] hike by the Bank of England in December."
The pound rose to USD1.1828 on Tuesday morning in London from USD1.1714 late Monday.
"The pound's appreciation against the US dollar is mostly a dollar move with the greenback weakening against a number of major currencies, extending losses after its biggest weekly drop in 14 years last week amid the prospect of a slowing pace of Fed tightening ahead," explained Victoria Scholar at interactive investor.
In the FTSE 100, Vodafone shares dropped by 5.0% as the telecommunications firm lowered its full-year outlook and set out plans for cost savings.
In the six months that ended September 30, Vodafone reported a "resilient" performance, recording a pretax profit of EUR1.73 billion, up from EUR1.28 billion in the previous year.
Revenue edged up to EUR22.93 billion from EUR22.49 billion, driven by higher service revenue and higher equipment sales.
Chief Executive Nick Read said Vodafone was taking a number of steps to mitigate the "economic backdrop of higher energy costs and rising inflation". This included pricing action in Europe, he said, as well as a new cost saving target of EUR1 billion or more.
Vodafone also lowered its full-year outlook for adjusted earnings before interest, tax, depreciation, and amortization and special losses to between EUR15.0 billion and EUR15.2 billion. Previously, it had guided between EUR15.0 billion and EUR15.5 billion.
Imperial Brands rose 0.3% despite reporting a drop in annual profit and revenue.
In the financial year that ended September 30, the tobacco firm's pretax profit dropped to GBP2.55 billion from GBP3.24 billion the previous year, as the Bristol-based company was hit by charges related to its exit from Russia and associated markets.
Revenue fell more modestly, slipping down to GBP32.55 billion from GBP32.79 billion a year before.
Imperial explained this decrease in revenue was primarily driven by a weaker euro, though tobacco volumes also declined by 4.7% against the previous year.
In the FTSE 250, Aston Martin dropped 8.2%, after Jefferies cut the automobile stock to 'underperform' from 'hold'.
Ninety One dropped 3.6%. The money manager said its interim profit shrank as the firm struggled with lower levels of new business volumes and portfolio de-risking by clients amid economic turmoil.
For six months that ended September 30, pretax profit was at GBP110.6 million, down 16% from GBP132.1 million in the prior year.
Revenue dropped by 2.9% to GBP384.3 million from GBP395.9 million.
"Rising inflation and interest rates, increased geopolitical uncertainty and sharply lower financial asset prices contributed to challenging operating conditions. The high levels of client engagement could not counter the impact of this environment on our results," said Chief Executive Hendrik du Toit.
Wincanton was up 1.9%, after the distribution firm said it remains on track to deliver full-year profit in-line with market expectations as it reported interim revenue growth across all its sectors.
In the six months that ended September 30, Wincanton posted a pretax profit of GBP25.8 million, up from GBP25.1 million the previous year, while revenue jumped to GBP753.6 million from GBP690.3 million.
This was thanks to good new business momentum, with contract renewals and extension won during the period with the likes of IKEA Dartford, the firm explained.
Stocks on the continent were higher. The CAC 40 index in Paris was up 0.3%, while the DAX 40 in Frankfurt was 0.1% higher. The euro traded at USD1.0403, up from USD1.0334.
In Asia, Chinese stocks rose smartly. The Shanghai Composite closed 1.6% higher, while the Hang Seng in Hong Kong closed up 4.1%.
China reported slower-than-expected growth in factory output and retail sales for October, as a surge in Covid cases and a deepening property slump weighs on the economy.
There was also news of protesters in southern China clashing with police in a rare display of public opposition to anti-Covid measures.
Videos circulating on social media since Monday night and verified by AFP showed hundreds taking to the street in the industrial metropolis of Guangzhou, some tearing down cordons intended to keep locked-down residents from leaving their homes.
In Tokyo, the Nikkei 225 closed up 0.1%.
Japan's economy shrank in the three months to September due to slower-than-expected consumption, dashing hopes of another quarter of growth.
Higher import volumes and costs fuelled by the weak yen and the soaring price of commodities such as oil weighed on the world's third-largest economy.
Against the yen, the dollar was quoted at JPY139.55, down from JPY140.45.
The S&P/ASX 200 in Sydney closed down 0.1%.
Gold jumped to USD1,776.08 an ounce early Tuesday from USD1,758.52 late Monday. Brent oil fetched USD92.55 a barrel, down from USD94.44.
Still to come on Tuesday, the EU will publish its latest growth figures, foreign trade data and a flash employment estimate at 1000 GMT.
By Heather Rydings; heatherrydings@alliancenews.com
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