London close: Sterling strength takes shine off FTSE

London stocks closed in a mixed state on Tuesday, with the top-flight index maintaining its positive position alongside its Wall Street counterparts, after the latest UK jobs data showed a plunge in real earnings.

The FTSE 100 ended the session up 0.36% at 7,536.06, and the FTSE 250 was down 0.23% at 20,336.41.

Sterling was in the green, last trading up 0.22% on the dollar at $1.2081, and strengthening 0.19% against the euro to change hands at €1.1882.

“Sterling-dollar weakness this morning helped drive FTSE 100 outperformance that is subsequently being unwound as the pound pushes higher,” said IG senior market analyst Joshua Mahony.

“FTSE miners have enjoyed a welcome boost in the wake of a bumper set of earnings from BHP that saw record profits for the year, driven by record highs in the commodity space.”

Mahony said that while economic concerns had brought volatility in the commodity space, the invasion of Ukraine was helping to drive demand for alternative energy such as coal and gas.

“While the recessionary environment does raise questions for the year ahead, the forward-looking nature of markets should mean that investors look beyond any short-term weakening in favour of a 2024 recovery.”

In economic news, UK real wages fell at the sharpest rate on record between April and June, according to figures from the Office for National Statistics.

Average total pay including bonuses rose 5.1% between April and June, with regular pay excluding bonuses up 4.7%.

However, adjusted for inflation, total pay fell 2.5% and regular pay was down by a record 3%.

Job vacancies in the three months to the end of July, meanwhile, fell for the first time in two years, dropping 19,800 to 1.27 million.

Vacancies remained at historically-high levels, but the data marked the first quarterly decline for the period since 2020, while the unemployment rate held steady in the three months to June at 3.8%.

“The number of people in work grew in the second quarter of 2022, whilst the headline rates of unemployment and of people neither working nor looking for a job were little changed,” said Darren Morgan, director of economic statistics at the ONS.

“Meanwhile, the total number of hours worked each week appears to have stabilised very slightly below pre-pandemic levels.”

Morgan said redundancies were still at very low levels.

“However, although the number of job vacancies remains historically very high, it fell for the first time since the summer of 2020.

"The real value of pay continues to fall - excluding bonuses, it is still dropping faster than at any time since comparable records began in 2001.”

On the continent, German investor sentiment deteriorated slightly in August according to the ZEW Center for European Economic Research in Mannheim.

The headline ZEW investor expectations index fell to -55.3 from -53.8 in July, hitting its worst level since October 2008.

Meanwhile, the current situation index declined to -47.6 in August from -45.8 the month before.

“The ZEW survey fell again in August and is at a level consistent with the economy contracting,” said Andrew Kenningham, chief Europe economist at Capital Economics.

“We now think a recession is unavoidable in the second half of this year as the impact of high energy prices on both households and industry takes effect.”

Across the pond, US industrial production rose a bit more quickly than expected last month.

According to the Department of Commerce, total industrial output grew at a month-on-month pace of 0.6% in July.

Economists had pencilled in a rise of 0.3% month-on-month.

Staying stateside, housebuilders in the US broke ground on far fewer homes than expected last month.

The Commerce Department reported that in seasonally-adjusted terms, the annualised rate of housing starts in July fell at a month-on-month pace of 9.6% to reach 1.446 million, compared to expectations for 1.54 million.

Starts shot 65.5% higher in the north east, but fell in the remaining regions, mainly in the midwest where they dropped by 33.8%, and in the south where they decreased by 18.7%.

On London’s equity markets, Anglo-Australian mining giant BHP jumped 5.47% after it posted a large rise in annual profits on the back of soaring coal prices, and said it would return almost $9bn to shareholders.

Miners were generally on the rise, with Glencore up 3.96%, Anglo American rising 3.5%, Rio Tinto ahead 3.85%, and Antofagasta 3.01% firmer.

Cybersecurity firm Darktrace rocketed 24.2% after it said late on Monday that it was in early takeover talks with private equity firm Thoma Bravo.

Watches of Switzerland added 1.58% after it reiterated its full-year guidance and reported a jump in first-quarter revenue.

On the downside, pipe maker Genuit slipped 0.12% after it posted a fall in interim profits, but maintained full-year guidance as revenues rose during the period due to a strong UK housing market.

Barratt Developments was in the red by 1.01%, even after the Competition and Markets Authority said it was dropping its leasehold mis-selling investigation into the housebuilder for lack of evidence.

Outside the FTSE 350, Ted Baker leapt 16.86% after agreeing to be bought by Reebok owner Authentic Brands Group in a £211m deal.

Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,536.06 0.36%
FTSE 250 (MCX) 20,336.41 -0.23%
techMARK (TASX) 4,392.41 0.07%

FTSE 100 - Risers

Glencore (GLEN) 482.90p 3.96%
Rio Tinto (RIO) 4,918.00p 3.85%
Anglo American (AAL) 3,002.50p 3.50%
B&M European Value Retail S.A. (DI) (BME) 432.20p 3.13%
Antofagasta (ANTO) 1,164.50p 3.01%
Next (NXT) 6,564.00p 2.47%
Centrica (CNA) 82.84p 2.32%
BAE Systems (BA.) 799.40p 2.25%
International Consolidated Airlines Group SA (CDI) (IAG) 123.00p 2.01%
BT Group (BT.A) 160.75p 2.00%

FTSE 100 - Fallers

Dechra Pharmaceuticals (DPH) 3,516.00p -3.14%
Mondi (MNDI) 1,627.50p -2.78%
Aveva Group (AVV) 2,426.00p -2.73%
Rightmove (RMV) 637.60p -2.66%
Fresnillo (FRES) 722.80p -2.11%
Spirax-Sarco Engineering (SPX) 11,270.00p -2.04%
Abrdn (ABDN) 172.50p -1.74%
Aviva (AV.) 460.10p -1.62%
Experian (EXPN) 2,892.00p -1.60%
Croda International (CRDA) 7,270.00p -1.57%

FTSE 250 - Risers

Darktrace (DARK) 515.20p 24.20%
XP Power Ltd. (DI) (XPP) 2,415.00p 8.54%
Bank of Georgia Group (BGEO) 1,924.00p 5.25%
Pets at Home Group (PETS) 382.40p 4.54%
TBC Bank Group (TBCG) 1,740.00p 4.19%
Auction Technology Group (ATG) 926.00p 3.23%
TP Icap Group (TCAP) 159.60p 2.77%
Wizz Air Holdings (WIZZ) 2,598.00p 2.61%
Dunelm Group (DNLM) 850.00p 2.60%
Ferrexpo (FXPO) 143.80p 2.49%

FTSE 250 - Fallers

FirstGroup (FGP) 114.20p -11.40%
NCC Group (NCC) 213.50p -6.15%
Hammerson (HMSO) 25.53p -4.09%
Clarkson (CKN) 3,510.00p -3.97%
HGCapital Trust (HGT) 397.50p -3.86%
Softcat (SCT) 1,375.00p -3.37%
Workspace Group (WKP) 580.00p -3.25%
Abrdn Private Equity Opportunities Trust (APEO) 442.00p -3.24%
IP Group (IPO) 78.95p -3.19%
Countryside Partnerships (CSP) 280.60p -3.04%