London close: Stocks slide as traders weigh UK jobs, await Fed minutes

London stocks finished in the red on Wednesday as traders assessed UK jobs data and awaited the release of the Federal Reserve’s meeting minutes.

The Office for National Statistics said the number of people in work rose by 172,000 to 31.750m in the three months to June, pushing the employment rate to 74.5% a latest record high. Economists had expected a 153,000 increase.

Jobless claims fell by 8,600 in July, surprising analysts who had predicted a 9,000 increase in the number of people filing for unemployment benefits.

The claimant rate remained at 2.2% last month, as estimated by economists.

The unemployment rate remained at 4.9% in the three months to June, also as expected.

Average weekly earnings grew 2.4% during the quarter, though the market expected the improvement from the 2.3% reading in May.

“The labour market data showed impressive resilience in the run-up to the EU referendum and the immediate aftermath of the vote to leave – although it is premature to draw any firm conclusions from this,” said Howard Archer, chief UK and European economist at IHS Global Insight.

“While the data suggests that companies generally avoided a knee-jerk reaction to the leave vote by getting rid of workers, it remains likely that softening economic activity and heightened uncertainty will take a toll on the labour market over the coming months.”

The pound fell 0.33% against the dollar to $1.3003 at 16:10 BST.

Attention now turns to the Fed’s minutes of its 26-27 July policy meeting at 1900 BST. At last month’s meeting, the Fed decided to keep interest rates unchanged amid risks to the global economy, including Brexit. However, the central bank struck a more positive tone saying the “near-term risks to the economic outlook had diminished”.

“The minutes will be important in determining the degree of confidence that officials had about their ability to raise rates at least once this year,” said Societe Generale.

“On that front, it will be crucial to gauge whether ‘many’, ‘most’, or ‘some’ officials felt that the strength in June payrolls repudiated the weakness in the May report.”

Federal Reserve Bank of St. Louis President James Bullard may also provide further clues behind the central bank’s plans for interest rates when he speaks in his city at 18:00 BST.

His speech follows two hawkish statements from fellow Fed policymakers William Dudley and Dennis Lockhart on Tuesday, who both separately suggested an interest rate hike was on the table at the next meeting on 20-21 September.

Meanwhile, oil prices cut their earlier losses after data showed a bigger-than-expected decline in weekly US crude inventories. The Energy Information Agency said US weekly crude inventories fell by 2.5m barrels last week to 521.1m barrels. It was more than the 200,000-barrel fall expected by analysts polled by S&P Global Platts.

Crude prices were sitting lower earlier on Wednesday following a report that Saudi Arabia plans to boost its production in August to a record level.

At 1618 BST Brent crude rose 0.90% to $49.68 per barrel and West Texas Intermediate edged up 0.30% to $46.72 per barrel.

In corporate news, insurer Admiral was sharply lower amid concerns about the group’s Solvency II position, after it lifted its interim dividend by almost a quarter and posted a jump in first-half profits.

Standard Chartered dropped after HSBC downgraded the stock to ‘hold’ from ‘buy’ and reiterated a target price of 650p, saying it was unlikely to reach its return on equity target of 8% in 2018 unless revenues rebound by about $3bn.

Investment bank Old Mutual was also down after Credit Suisse downgraded the stock to ‘neutral’ from ‘outperform’.

Mining stocks were under the cosh, including Fresnillo, Antofagasta and Anglo American, as metal prices fell.

CRH rallied amid speculation it might be included in the Eurostoxx.

Indivior rocketed after saying its new heroin addiction treatment has proved successful in late-stage clinical trials, meaning it could be approved for sale in the US by the end of next year.

Savills was given a boost as Citigroup upgraded the stock to ‘buy’ from ‘neutral’ following solid first-half results.

Balfour Beatty surged after it reinstated its dividend as it reported a smaller loss for the half year ended 1 July.

Market Movers

FTSE 100 (UKX) 6,859.15 -0.50%
FTSE 250 (MCX) 17,758.68 -0.28%
techMARK (TASX) 3,503.78 -0.33%

FTSE 100 - Risers

Barratt Developments (BDEV) 448.20p 1.47%
CRH (CRH) 2,535.00p 0.92%
Whitbread (WTB) 4,035.00p 0.85%
BT Group (BT.A) 395.80p 0.82%
Persimmon (PSN) 1,753.00p 0.69%
Babcock International Group (BAB) 1,021.00p 0.69%
Paddy Power Betfair (PPB) 9,705.00p 0.67%
Carnival (CCL) 3,646.00p 0.63%
Dixons Carphone (DC.) 364.70p 0.47%
Merlin Entertainments (MERL) 479.90p 0.38%

FTSE 100 - Fallers

Admiral Group (ADM) 2,081.00p -7.68%
London Stock Exchange Group (LSE) 2,797.00p -2.92%
Antofagasta (ANTO) 542.50p -2.86%
Fresnillo (FRES) 1,927.00p -2.77%
Anglo American (AAL) 865.70p -2.73%
Standard Chartered (STAN) 637.10p -2.45%
Randgold Resources Ltd. (RRS) 8,385.00p -2.33%
International Consolidated Airlines Group SA (CDI) (IAG) 385.20p -2.31%
Glencore (GLEN) 192.60p -2.18%
Old Mutual (OML) 208.90p -2.11%

FTSE 250 - Risers

Indivior (INDV) 327.40p 8.77%
Savills (SVS) 728.50p 4.22%
Rank Group (RNK) 223.90p 3.32%
Daejan Holdings (DJAN) 5,625.00p 3.12%
Balfour Beatty (BBY) 251.80p 3.03%
Restaurant Group (RTN) 420.40p 2.63%
Cairn Energy (CNE) 208.70p 2.30%
Keller Group (KLR) 901.50p 2.27%
Crest Nicholson Holdings (CRST) 441.80p 2.17%
IG Group Holdings (IGG) 951.00p 2.15%

FTSE 250 - Fallers

Laird (LRD) 308.00p -6.95%
Euromoney Institutional Investor (ERM) 1,036.00p -6.58%
Ibstock (IBST) 170.30p -6.15%
Hochschild Mining (HOC) 294.00p -6.09%
NMC Health (NMC) 1,264.00p -4.96%
Entertainment One Limited (ETO) 242.50p -4.68%
Polypipe Group (PLP) 267.80p -4.36%
Aldermore Group (ALD) 133.60p -4.30%
Jupiter Fund Management (JUP) 411.90p -3.34%
Card Factory (CARD) 289.50p -3.14%