London close: Stocks mixed as jobless rate ticks higher

London stock markets closed in a mixed state on Tuesday, as investors juggled fresh economic data from the United States and the latest UK unemployment report.

The FTSE 100 slipped 0.34% to close at 7,751.08, while the FTSE 250 eked out a modest gain of 0.07% to close at 19,272.72.

Sentiment was already dampened at the start of the day, following disappointing economic data out of China.

On the currency front, sterling was in the red, last falling 0.29% on the dollar to trade at $1.2493, and slipping 0.19% against the euro to change hands at €1.1499.

“Markets in Europe tried to move higher in early trade, but turned lower during the afternoon session, with today’s weakness coinciding with comments from Republican house speaker Kevin McCarthy that no progress had been made on some of the key issues with respect to the debt ceiling,” said CMC Markets chief market analyst Michael Hewson.

“Coming on the back of disappointing Chinese retail sales numbers which are weighing on luxury retail and basic resources, there's been little reason to buy stocks today, with the FTSE 100 underperforming.”

UK unemployment unexpectedly rises, China data disappoints

In economic news, the UK joblessness rate unexpectedly increased in the three months to March, according to the Office for National Statistics (ONS).

The unemployment rate climbed to 3.9% from 3.8% in the preceding month, defying expectations of remaining steady, due to an increase in long-term unemployment.

At the same time, estimated job vacancies fell by 55,000 to 1.083 million in the quarter from February to April, marking the 10th successive fall.

The ONS attributed that to persistent uncertainty and economic pressures influencing recruitment decisions.

However, the ONS also reported that the average total pay, inclusive of bonuses, rose by 5.8% while regular pay excluding bonuses increased by 6.7% during January to March.

Accounting for inflation, both total and regular pay growth experienced a yearly decline of 3% and 2% respectively.

Moreover, the economic inactivity rate dropped by 0.4 percentage points to 21%, propelled by the 16 to 24 age group.

Still, the number of those inactive due to long-term sickness reached an all-time high.

“Employment and unemployment both rose again in the first three months of 2023, driven in particular by men,” said Darren Morgan, director of economic statistics at the ONS.

“This means the number of those neither working nor looking for work continues to fall, although the number of people not working due to long-term sickness rose again, to a new record.

“However, the number of people on employers’ payrolls fell in April for the first time in over two years, though this is an early estimate that could be revised later.”

On the continent, economic growth in the eurozone in the first quarter was marginal, according to Eurostat.

GDP growth, both in the common currency area and across the European Union , was in line with expectations, registering a 0.1% and 0.2% increase, respectively.

On a year-on-year basis, the seasonally-adjusted GDP rose by 1.3% in the eurozone and 1.2% across the EU.

German business sentiment meanwhile took a significant hit in May, with concerns about potential rate hikes and the US debt ceiling weighing heavily, according to the ZEW Center for European Economic Research.

The headline ZEW investor expectations index plunged to -10.7 from 4.1 in April, falling short of consensus expectations of -5.1.

ZEW’s current conditions index also dropped to -34.8 in May from -32.5 the previous month, defying consensus expectations of -37.0.

Across the pond, US industrial production rebounded in April after two consecutive months of stagnation, led by a resurgence in factory activity.

According to the Department of Commerce, overall production grew by 0.5% on a monthly basis, above consensus expectations for a 0.4% uptick.

Still, the prior two months' industrial production growth was revised downwards to a standstill.

American retail sales volumes also grew by 0.4% to $686.1bn, albeit at a slower pace than the projected rise of 0.7%.

Finally on data, disappointing Chinese industrial and retail growth added to global economic apprehension at the start of the day.

Industrial production grew at a slower pace of 5.6% in April, significantly below the expected 10.6%.

Similarly, retail sales rose 18.4% year on year, falling short of the 21% forecast.

Smiths Group on the rise, Vodafone takes a tumble

On London’s equity markets, Smiths Group shares jumped 1.48% following a double upgrade to 'buy' at Bank of America Merrill Lynch.

“Smiths’ portfolio exposure is biassed towards defensive, regulated and late cycle markets - safety and security, energy - that should appeal to investors given macro concerns,” the broker said.

“Aftermarket is circa 38% of mix and concentrated in detection and John Crane, where demand is elevated on post-pandemic aviation security upgrades, and energy security and transition.”

Britvic's shares also bubbled up 0.7% as the beverage firm reported higher interim profits and revenue, along with a dividend increase, buoyed by strong demand and impressive performances from Tango and Pepsi MAX.

The company also lauded an "excellent" start to the year.

DCC's shares rose 2.81% after it reported a surge in full-year profits despite turbulent economic conditions and rising commodity prices.

Land Securities Group, despite reporting an annual loss due to higher interest rates and a weaker economic environment impacting the value of its properties, saw its shares rise by 2.35%.

On the downside, Vodafone Group slid a substantial 7.44% after the telecoms giant warned of flat earnings in the coming year, following a decrease in annual profits - a performance its CEO labelled as "not good enough".

The company also announced a significant restructuring involving 11,000 job cuts.

Shares in Primark owner Associated British Foods dipped 0.1% despite receiving an upgrade to 'outperform' from 'sector perform' at RBC Capital Markets.

Animal genetics specialist Genus saw its shares drop 0.93% after it downgraded its full-year profit forecast, citing "very challenging" market conditions in China's porcine business.

High street bakery Greggs fell 3.23%, after it forecast strong growth in demand for the year driven by new product lines, with concerns about cost inflation and pressure on customers seeming to dampen investor sentiment.

IT professional services firm FDM Group Holdings declined 1.99% after it said trading in the first quarter of its fiscal year was in line with expectations, but acknowledged a slowdown in the second quarter due to global macroeconomic and geopolitical uncertainty.

Reporting by Josh White for Sharecast.com.

FTSE 100 -26.62 (-0.34%) 7,751.08

RISERS
DCC +2.81% 4,785p
Land Securities Group + 2.35% 634.6p
Rolls-Royce Holdings +2.1% 148.15p
Centrica +1.79% 119.65p
Compass Group + 1.52% 2,200p
Smiths Group + 1.48% 1,680.5p
Smith & Nephew +1.13% 1,299p
Sage Group +1.06% 821p
Reckitt Benckiser Group +0.92% 6,570p
International Consolidated Airlines Group +0.91% 155.7p

FALLERS
Vodafone Group -7.44% 83.33p
Ocado Group -3.9% 414.2p
Kingfisher -3.04% 242.3p
JD Sports Fashion -2.49% 170.25p
Admiral Group -2.4% 2,193p
Prudential -2.39% 1,143p
BT Group -2.24% 150.3p
Imperial Brands -1.82% 1,839p
Frasers Group -1.72% 767p
M&G -1.7% 196.8p

FTSE 250 +13.97 (+0.07%) 19,272.72

RISERS
Aston Martin Lagonda Global Holdings +3.75% 215.6p
Playtech +3.09% 633p
Tritax EuroBox +2.97% 69.3p
Syncona +2.94% 154p
Baltic Classifieds Group +2.81% 160.8p
Diversified Energy Company +2.58% 91.5p
Videndum +2.38% 731p
Hilton Food Group +2.38% 731p
EasyJet +2.33% 505.8p
Carnival +2.22% 735.4p

FALLERS
Currys -3.73% 55.5p
Tullow Oil -3.67% 22.6p
Greggs -3.23% 2,752p
John Wood Group -3.06% 139.2p
Bridgepoint Group -2.72% 221.8p
Watches of Switzerland Group -2.57% 740.5p
RIT Capital Partners -2.24% 1,916p
Jupiter Fund Management -2.15% 118.6p
Marshalls -2.04% 287.6p
Essentra -2.02% 194p