London close: Stocks rise as sterling strengthens

London’s stock market made a recovery by the close on Tuesday, overcoming earlier losses despite a strengthening pound.

The FTSE 100 closed 0.12% higher at 7,282.52, while the FTSE 250 outperformed with an uptick of 0.62%, finishing at 18,140.09 points.

In currencies, sterling was last up 0.32% on the dollar, trading at $1.2902, as it rose 0.38% against the euro to change hands at €1.1735.

“Equity indices continue to cautiously regain some of last week's losses ahead of Wednesday's US inflation reading and as earnings season kicks off later in the week,” said IG senior market analyst Axel Rudolph.

“Following a slump in German investor morale to a seven-month low, US small business optimism hit a seven-month high, supporting US stocks.

“Sales expectations in the US improved and fewer firms expect worse business conditions into year end.”

UK wage growth surges, US small business confidence climbs, German inflation rises

In economic news, figures released on Tuesday indicate a potential shift in the Bank of England's monetary policy due to higher-than-expected wage growth in the UK.

According to the Office for National Statistics (ONS), the growth rate of UK wages in the three months to May exceeded projections, with a 7.3% increase - matching the revised growth rate of the prior month, and surpassing predictions of 7.1%.

The consistent surge in wage growth marked a new high, matching the peak seen during the Covid-19 pandemic in the April to June 2021 period.

Factoring in one-off bonuses, wage growth was at 6.9%, a minor uptick from the previous 6.7% and slightly above the anticipated 6.8%.

The higher-than-expected figures amplified the possibility of further rate hikes from the Bank of England.

Unemployment data also revealed a slight rise, with a rate of 4% in the three months to May, up from the previous 3.8%.

“The labour market became less tight in May and there are some signs of momentum in wage growth slowing a bit,” said Ashley Webb, UK economist at Capital Economics.

“But with wage growth still well above the levels consistent with the 2% inflation target, this won’t ease the Bank of England’s inflation fears significantly.

“Our forecast is for the Bank to raise interest rates by 25 basis points in August, from 5% now to 5.25%, but we can’t rule out another 50 basis point hike.”

Across the pond, small businesses in the US displayed increased optimism in June.

The National Federation of Independent Business (NFIB) reported a rise in its index of small business optimism to 91.0 points, up from 89.4 in May and outperforming the predicted level of 89.9.

Meanwhile, final data confirmed an increase in inflation in Germany in June, following a series of decreases in the preceding months.

The Federal Statistics Office announced a 6.8% increase in consumer prices year on year.

Its core inflation rate, excluding volatile items such as food and energy, also rose to 5.8% in June from 5.4% in May.

The mid-second quarter inflation rebound was primarily attributed to base effects from the temporary reduction in rail fare last year, which notably influenced the core rate.

Centrica and British Land rise, Dowlais and Pennon fall

On London’s equity markets, energy company Centrica experienced modest gains of 0.04%.

The slight uptick was driven by the announcement of a significant deal with US-based Delfin Midstream, worth an estimated $8bn.

It would entail the purchase of one million tonnes of liquefied natural gas (LNG) annually for a 15-year duration, bolstering the company's long-term operational outlook.

Meanwhile, property owner British Land demonstrated a robust rally, with shares climbing by 3.83%.

The company announced that it was continuing to maintain strong operational momentum, despite the prevailing macroeconomic uncertainties.

In particular, the firm credited its retail parks as a “winning format”, contributing to the positive sentiment among investors.

On the downside, Melrose spin-off Dowlais Group saw its shares slump by 5.88% after Citi initiated coverage of the stock with a 'sell' rating and set a price target at 97p, suggesting a potential downside of around 20%.

Pennon Group also witnessed a downward trend, falling 1.09% after it announced the acquisition of three new renewable energy generation projects for a total of £85m.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,282.52 0.12%
FTSE 250 (MCX) 18,140.09 0.62%
techMARK (TASX) 4,305.45 -0.05%

FTSE 100 - Risers

Unite Group (UTG) 882.50p 2.98%
Land Securities Group (LAND) 582.00p 2.72%
JD Sports Fashion (JD.) 144.50p 2.45%
Associated British Foods (ABF) 2,050.00p 1.99%
Flutter Entertainment (CDI) (FLTR) 15,435.00p 1.85%
Next (NXT) 6,812.00p 1.82%
Barratt Developments (BDEV) 408.10p 1.79%
SEGRO (SGRO) 718.60p 1.78%
Croda International (CRDA) 5,638.00p 1.77%
Legal & General Group (LGEN) 226.40p 1.75%

FTSE 100 - Fallers

Rentokil Initial (RTO) 590.80p -1.67%
Convatec Group (CTEC) 196.70p -1.55%
Rolls-Royce Holdings (RR.) 145.65p -1.52%
Melrose Industries (MRO) 484.50p -1.42%
Relx plc (REL) 2,442.00p -1.29%
Admiral Group (ADM) 2,044.00p -1.11%
HSBC Holdings (HSBA) 600.90p -0.99%
AstraZeneca (AZN) 10,082.00p -0.96%
RS Group (RS1) 722.40p -0.96%
London Stock Exchange Group (LSEG) 8,004.00p -0.94%

FTSE 250 - Risers

Synthomer (SYNT) 82.80p 5.48%
RHI Magnesita N.V. (DI) (RHIM) 2,828.00p 5.44%
Hammerson (HMSO) 25.20p 5.09%
Balanced Commercial Property Trust Limited (BCPT) 68.10p 4.61%
Man Group (EMG) 235.50p 4.53%
Just Group (JUST) 77.10p 4.47%
Savills (SVS) 850.50p 4.04%
NB Private Equity Partners Ltd. (NBPE) 1,550.00p 4.03%
Big Yellow Group (BYG) 1,035.00p 3.92%
British Land Company (BLND) 314.30p 3.83%

FTSE 250 - Fallers

OSB Group (OSB) 334.40p -7.42%
Carnival (CCL) 1,307.50p -3.61%
Oxford Instruments (OXIG) 2,550.00p -2.86%
Digital 9 Infrastructure NPV (DGI9) 55.10p -2.84%
Molten Ventures (GROW) 251.80p -2.55%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 75.00p -2.34%
BH Macro Ltd. GBP Shares (BHMG) 352.00p -2.22%
Computacenter (CCC) 2,112.00p -2.13%
BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 128.00p -1.99%
Hikma Pharmaceuticals (HIK) 1,818.50p -1.97%