(Alliance News) - Stocks in London were higher in early trade on Tuesday, receiving some deal-making impetus, after figures showed the UK jobless rate was unchanged in June, but wages fell markedly on an inflation-adjusted basis.
The mood in Europe was lifted by a strong session on Wall Street on Monday. Poor manufacturing data from New York raised hopes that Federal Reserve will not move so hawkishly.
"The weak data again made its magic: revived the expectation that the Federal Reserve could not raise the rates at full speed, if the economy starts crumbling," said Swissquote analyst Ipek Ozkardeskaya.
The latest Empire State manufacturing survey, which tracks the conditions of the manufacturing sector in New York, tumbled to minus 31.3 points in August from positive 11.1 in July.
The FTSE 100 was up 22.96 points, or 0.3%, at 7,532.11. The FTSE 250 index was up 11.14 points, or 0.1%, at 20,393.90. The AIM All-Share index was up 0.59 of a point, or 0.1%, at 934.70.
The Cboe UK 100 index was up 0.3% at 752.26. The Cboe 250 was up 0.1% at 17,685.66. The Cboe Small Companies was up 0.2% at 14,500.37.
In Paris, the CAC 40 was up 0.3%, while the DAX 40 in Frankfurt climbed 0.2%.
The euro stood at USD1.0143 shortly after the European equities open on Tuesday, down from USD1.0184 after markets closed on Monday. Against the yen, the dollar was trading at JPY133.75, up from JPY133.07.
Ozkardeskaya added: "The dollar index rebounded, and the stronger greenback sent the EURUSD below the USD1.02 mark on Monday. The euro bears bring parity back to their target range, thinking that the European Central Bank can't become too aggressive on its rate hikes, when the energy crisis deepens and threatens to send the Eurozone economy into a deep recession."
The pound was quoted at USD1.2030 early Tuesday in London, down from USD1.2075 late Monday.
The UK unemployment rate was steady in June, while wage growth figures came in slightly ahead of expectations, but continued to lag the red-hot inflation rate.
The UK unemployment rate was 3.8% in the three months to June, unchanged from the three months to May, according to the Office for National Statistics.
A year earlier, the unemployment rate had sat at 4.7%.
Wage growth figures, meanwhile, came in above expectations. Regular pay, so excluding bonuses, was 4.7% higher in the three months to June. The figure topped FXStreet cited consensus of 4.5% growth.
Including bonuses, wage growth was 5.1% year-on-year, beating a forecast of 4.5% growth.
That means UK earnings by both measures continue to lag consumer price inflation, which ran at 9.4% in June.
"In real terms (adjusted for inflation), over the year, total pay fell by 2.5% and regular pay fell by a record 3.0%," the ONS added. The 3.0% decline was a record fall in real terms pay, the ONS added.
Still to come on the economic events calendar on Tuesday is the latest Germany ZEW indicator of economic sentiment at 1000 BST.
Gold stood at USD1,777.67 an ounce early Tuesday, down slightly from USD1,778.71 at the London equities close on Monday. Brent oil was quoted at USD94.37 a barrel, up slightly from USD94.22.
In London, Darktrace shares surged 18% in early trade. The cybersecurity company late Monday confirmed that it is in early stages of discussions with private equity company Thoma Bravo on a possible cash offer for the Cambridge-based firm.
Thoma Bravo has until September 12 to either make a firm offer for Darktrace, or state that it will not be making an offer.
Darktrace has a market capitalisation of GBP3.27 billion.
Agreeing to a takeover, meanwhile, was Ted Baker. The stock was up 17% at 108.64 pence, giving it a market value of GBP195.4 million.
Ted Baker has agreed to GBP211 million takeover from Reebok owner Authentic Brands Group, ending a several months long formal sales process. ABG will fork out 110p per Ted Baker share, an 18% premium to the retailer's 93.1p closing price on Monday.
Ted Baker has been in a formal sales process since April, and initially had said that Sycamore Partners Management, a New York-based private equity firm whose approaches had triggered the move, was participating. However, Ted Baker later confirmed that Sycamore was no longer participating in the sales process.
In May, Ted Baker said it had progressed talks with a "preferred counterparty" into the due diligence phase, however the unnamed party had bowed out of a potential deal in June.
A takeover will spell the end of a roughly 25-year stint as a listed firm. That period in recent years has been marred by a loss of investor confidence in the stock, amid management changes, profit cautions and a scandal involving its former chief executive.
It was hit by complaints of inappropriate hugging made against then-CEO Ray Kelvin in 2019. It then went through three CEOs within a year, as well as several profit warnings.
ABG in March completed the buy of Reebok from Adidas in a deal worth up to EUR2.1 billion.
On AIM, Invinity Energy added 15%. The energy storage firm has signed a non-binding deal with to establish a US joint-venture to build and sell vanadium flow batteries.
The JV will be equally owned by Invinity and potential partner US Vanadium.
"The proposed JV expects to benefit from US national, state, and local incentives to manufacture and sell energy storage products that transform intermittent renewable energy into a reliable, dispatchable and low-carbon pillar of the US and global energy infrastructure," Invinity said, adding that the recent backing of a bumper climate bill creates a "strongly supportive" backdrop.
Elsewhere in London, miners rebounded. Rio Tinto and Glencore each added 1.4%. BHP led the way with a 3.7% share price rise.
In the year to June 30, BHP's revenue rose 14% to USD65.10 billion from USD56.92 billion. Pretax profit was 36% higher at USD33.14 billion from USD24.29 billion. It raised its dividend by 8.0% to USD3.25 per share from USD3.01.
It noted an exceptional gain of USD7.1 billion after tax on the merger of its petroleum business with Woodside, an Australian petroleum exploration and production company.
The firm noted, however, that this gain was partly offset by a USD1.1 billion cost coming from a dam failure for its Brazilian mining joint venture Samarco Mineracao. Covid-19 also resulted in a USD1.5 billion negative financial impact after tax.
It raised its dividend by 8.0% to USD3.25 per share from USD3.01.
By Eric Cunha; ericcunha@alliancenews.com
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Glencore (GLEN)
Invinity Energy (IES)
Darktrace (DARK)