London close: Stocks finish positive ahead of key inflation data

London stocks closed higher on Tuesday, as investors digested the latest UK jobs data and anticipated upcoming inflation reports from both the UK and the US.

The FTSE 100 rose 0.3%, ending the day at 8,235.23 points, while the FTSE 250 climbed 0.32% to close at 20,744.08 points.

In currency markets, sterling was last up 0.43% on the dollar, trading at $1.2825, while it rose 0.27% against the euro to change hands at €1.1712.

“After the rebound of last week the FTSE 100 looks a little becalmed,” said IG chief market analyst Chris Beauchamp.

“A lack of any major news updates has drained some momentum from the index, but it has shrugged off the early August volatility remarkably well.

“Once more it seems the UK’s relative cheapness has brought global investors flocking back.”

Beauchamp added that it looked like “back to normal” for markets as tech stocks led the way higher again following lower US PPI data.

“The reading has given heart to beleaguered investors, who remain skittish after last week’s volatility.

“Setting aside the carnage in the yen and the Nikkei, last week feels very much like a normal pullback in an otherwise strong year, and recession fears, like expectations of a more dramatic cut in rates, have been dialled back over the past few sessions.”

UK unemployment unexpectedly falls, grocery price inflation rises

In economic news, the UK's unemployment rate saw an unexpected decline in June, according to data released by the Office for National Statistics.

The rate fell to 4.2%, down from 4.4% in May, surpassing analysts' expectations of a rise to 4.5%.

In addition, average earnings growth, excluding bonuses, slowed to 5.4% from 5.8% in May, below the anticipated 4.6%.

That represented the slowest wage growth since mid-2022. When including bonuses, average earnings increased by 4.5%, also below expectations and down from 5.7% in May.

“There was a fall in the unemployment rate, which is now lower than a year ago,” said ONS director of economic statistics Liz McKeown.

“Meanwhile, there was a modest increase in both the total numbers of people in employment and the number of employees on payroll in the latest quarter.

“However, the medium-term picture remains somewhat subdued with the employment rate still lower than a year ago and the growth rate in the number of payrolled employees having slowed over the year.”

In the retail sector, UK grocery price inflation rose for the first time since March last year, according to Kantar data.

Inflation in grocery prices edged up to 1.8% in the four weeks ended 4 August, from 1.6% in the previous month.

The increase was reflected in a varied consumer experience, with prices rising in 182 product categories but dropping in 89 others.

Among notable changes, kitchen towels and baked beans saw price reductions of 7% and 5%, respectively.

Market-wise, J Sainsbury recorded its largest annual market share gain since 1997, up by 0.5 percentage points, while Tesco solidified its leading position with a 27.6% market share and a 4.9% sales increase.

“Having reached its lowest rate in almost three years in July, August saw inflation nudge up again slightly,” said Fraser McKevitt, head of retail and consumer insight at Kantar.

“While this is noticeable following 17 straight months of falling rates, it actually marks a return to the average levels seen in the five years before the start of the cost of living crisis.

“With this kind of pricing spread, shoppers will find that the type of product they’re putting in their baskets will really dictate how much they pay.”

On the continent, business sentiment in Germany took a significant hit in August.

The ZEW economic sentiment index dropped sharply by 22.6 points from July, landing at 19.2, the lowest since July 2022.

Additionally, the assessment of Germany's current economic situation worsened, with the corresponding index falling by 8.4 points to -77.3 in August.

Grocers in the green, Flutter slips ahead of results

On London’s equity markets, J Sainsbury added 1.71%, buoyed by the data from Kantar showing its largest market share gain since 1997.

Tesco also edged up by 0.42%.

Just Group surged by 14.48% after reporting a 44% increase in underlying operating profit for the first half, reaching £249m, surpassing consensus expectations.

The company also announced it expected to “substantially exceed” its previous 2024 guidance, further boosting investor confidence.

Specialty chemicals firm Synthomer rose 4.82% following the release of its interim results, while Bridgepoint Group rallied 5.75% after JPMorgan upgraded the stock to ‘overweight’ from ‘neutral,’ citing an attractive valuation and potential for earnings growth.

Admiral Group gained 2.19% after Citi issued a positive short-term outlook ahead of the company's first-half results, citing an improving UK motor claims environment.

Housebuilders Persimmon and Bellway also saw gains of 2.06% and 4.12%, respectively, after Bellway announced it was abandoning its pursuit of Crest Nicholson.

Crest Nicholson, however, plummeted by 15.88% on the news.

Elsewhere on the downside, Flutter Entertainment slipped 0.2% ahead of its second-quarter results, with UBS expressing concerns over potential challenges following peer DraftKings downgrading its EBITDA guidance.

Dowlais Group fell 3.1% after the GKN Automotive owner revealed it was considering a sale of its powder metallurgy business and forecasted a decline in full-year revenue.

Genuit Group, formerly known as Polypipe, dropped 4.62% after reporting a decline in first-half profits amid a subdued market.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,235.23 0.30%
FTSE 250 (MCX) 20,744.08 0.32%
techMARK (TASX) 4,836.61 0.45%

FTSE 100 - Risers

Admiral Group (ADM) 2,744.00p 2.19%
Persimmon (PSN) 1,610.00p 2.06%
Sainsbury (J) (SBRY) 276.00p 1.71%
Severn Trent (SVT) 2,557.00p 1.67%
United Utilities Group (UU.) 1,007.00p 1.64%
BAE Systems (BA.) 1,323.50p 1.53%
Intermediate Capital Group (ICG) 2,036.00p 1.39%
Standard Chartered (STAN) 731.80p 1.36%
GSK (GSK) 1,585.50p 1.30%
Phoenix Group Holdings (PHNX) 544.00p 1.30%

FTSE 100 - Fallers

Antofagasta (ANTO) 1,842.00p -2.18%
Marks & Spencer Group (MKS) 320.50p -1.76%
Glencore (GLEN) 405.40p -1.18%
Pershing Square Holdings Ltd NPV (PSH) 3,500.00p -0.96%
Vodafone Group (VOD) 73.88p -0.94%
Spirax Group (SPX) 7,685.00p -0.84%
Smith & Nephew (SN.) 1,147.00p -0.78%
Burberry Group (BRBY) 666.40p -0.69%
WPP (WPP) 686.20p -0.67%
Hikma Pharmaceuticals (HIK) 2,002.00p -0.65%

FTSE 250 - Risers

Just Group (JUST) 134.40p 14.48%
Bridgepoint Group (Reg S) (BPT) 290.80p 5.75%
IP Group (IPO) 39.00p 4.80%
Bellway (BWY) 2,936.00p 4.12%
Elementis (ELM) 155.60p 3.16%
Direct Line Insurance Group (DLG) 179.10p 2.86%
Bytes Technology Group (BYIT) 475.60p 2.79%
Man Group (EMG) 217.40p 2.71%
SSP Group (SSPG) 165.10p 2.67%
BH Macro Ltd. GBP Shares (BHMG) 393.00p 2.58%

FTSE 250 - Fallers

Crest Nicholson Holdings (CRST) 214.80p -20.73%
Genuit Group (GEN) 447.50p -4.62%
W.A.G Payment Solutions (WPS) 63.00p -3.73%
Marshalls (MSLH) 321.00p -3.15%
Rathbones Group (RAT) 1,810.00p -2.90%
Victrex plc (VCT) 1,016.00p -2.51%
Bank of Georgia Group (BGEO) 4,025.00p -2.44%
JPMorgan Indian Investment Trust (JII) 1,028.00p -2.31%
Me Group International (MEGP) 191.60p -1.96%
Clarkson (CKN) 3,835.00p -1.94%