London midday: Stocks extend gains amid rate cut hopes

London stocks had extended gains by midday on Tuesday as a further easing of UK wage growth raised rate cut expectations.

The FTSE 100 was up 1.2% at 7,728.6.

Russ Mould, investment director at AJ Bell, said: "The blue-chip UK index was led by a rally in financials including a 3.1% gain from Prudential and a 2% rise from Standard Chartered.

"Interestingly, nearly all sectors were in positive territory, implying that investors were feeling upbeat across the board which is a healthy situation to have in markets.

"Investor sentiment was boosted by slowing UK wage growth which raises the chances of the Bank of England cutting interest rates sooner rather than later. However, imminent US inflation data could easily turn markets on their head if it looks like the cost-of-living pressures are here to stay for a while longer, and that the Fed won’t be cutting rates in the near term."

Data released earlier by the Office for National Statistics showed that wage growth eased again in the three months to January, while the unemployment rate ticked higher.

Average regular pay growth excluding bonuses was 6.1%, down from 6.2% in the previous quarter. This marked the slowest growth in more than a year but was in line with expectations.

Real regular wages, which take into account consumer price inflation, were up 2%. This was the highest since the summer of 2019.

The unemployment rate edged up to 3.9% in the three months to January from 3.8%, versus expectations for it be unchanged.

The data also showed that the number of vacancies fell again, from 928,000 in the three months to January to a 32-month low of 908,000 in the three months to February.

ONS director of economist statistics Liz McKeown said: "Recent trends in the jobs market are continuing, with earnings, in cash terms, growing more slowly than recently but, thanks to lower inflation, real-terms pay continues to increase.

"The number of job vacancies has also been falling for coming up to two years, though the total remains more than 100,000 above its pre-pandemic level.

"Over the last year, there was little change in the proportions of people who are employed, unemployed or neither working nor looking for work, though the overall number of people in work is still rising."

Still to come on the macro front, all eyes will be on the US consumer price index due at 1330 GMT.

In equity markets, interdealer broker TP ICAP surged as it posted better-than-expected full-year profits, announced a £30m share buyback and confirmed it was exploring options for its data business Parameta Solutions which could include a potential IPO of a minority stake.

British American Tobacco was on the rise after confirming it is mulling a divestment of a portion of its stake in listed Indian tobacco firm ITC.

On the downside, housebuilder Persimmon slumped as it warned of continuing tough markets and reported a worse-than-expected 52% decline in full-year profits. Pre-tax profit for the year to December plunged to £351.8m, missing estimates of £359.5m.

Pizza chain Domino's fell as it reported increased profit, cashflow and shareholder returns in 2023 on the back of solid organic growth, but revealed a sharp slowdown in the fourth quarter.

Pets at Home was down after the UK’s Competition and Markets Authority said it had provisionally decided to launch a formal market investigation after a review into the veterinary industry found that pet owners could be paying too much for medicines or prescriptions. AIM-listed CVS Group tanked on the news.

Russ Mould pointed out that CVS is the biggest vet group on the UK stock market and said it’s understandable its share price has crashed on the news.

"Pets at Home is also exposed, though its vet practices are only one part of a broader group which includes selling pet food and accessories," he said.

Market Movers

FTSE 100 (UKX) 7,759.10 1.17%
FTSE 250 (MCX) 19,595.79 0.34%
techMARK (TASX) 4,536.41 0.53%

FTSE 100 - Risers

Prudential (PRU) 818.20p 3.81%
British American Tobacco (BATS) 2,392.50p 3.17%
Airtel Africa (AAF) 96.75p 3.09%
Entain (ENT) 755.00p 2.75%
Rio Tinto (RIO) 4,937.00p 2.65%
HSBC Holdings (HSBA) 590.50p 2.55%
Standard Chartered (STAN) 674.60p 2.21%
Glencore (GLEN) 407.00p 2.16%
Smurfit Kappa Group (CDI) (SKG) 3,408.00p 2.04%
Barclays (BARC) 177.24p 1.98%

FTSE 100 - Fallers

Persimmon (PSN) 1,321.50p -3.86%
Barratt Developments (BDEV) 473.90p -0.92%
Severn Trent (SVT) 2,592.00p -0.73%
SSE (SSE) 1,602.50p -0.65%
Croda International (CRDA) 4,732.00p -0.17%
St James's Place (STJ) 453.40p -0.07%
Mondi (MNDI) 1,350.00p 0.04%
Land Securities Group (LAND) 627.20p 0.06%
Centrica (CNA) 130.30p 0.08%
National Grid (NG.) 1,056.00p 0.14%

FTSE 250 - Risers

TP Icap Group (TCAP) 221.00p 11.28%
Future (FUTR) 603.00p 3.52%
Ferrexpo (FXPO) 52.90p 2.92%
Hill and Smith (HILS) 1,898.00p 2.59%
Quilter (QLT) 100.40p 2.50%
Harbour Energy (HBR) 259.10p 2.29%
Bridgepoint Group (Reg S) (BPT) 268.00p 2.21%
Aston Martin Lagonda Global Holdings (AML) 166.30p 1.96%
FirstGroup (FGP) 164.50p 1.92%
Helios Towers (HTWS) 79.80p 1.85%

FTSE 250 - Fallers

Domino's Pizza Group (DOM) 346.00p -6.03%
Wizz Air Holdings (WIZZ) 2,275.00p -2.69%
NB Private Equity Partners Ltd. (NBPE) 1,650.00p -2.37%
TI Fluid Systems (TIFS) 152.40p -2.18%
Pets at Home Group (PETS) 269.20p -2.18%
Drax Group (DRX) 483.10p -2.17%
International Distributions Services (IDS) 235.20p -1.63%
Pennon Group (PNN) 693.00p -1.21%
Genus (GNS) 1,790.00p -1.16%
Hipgnosis Songs Fund Limited NPV (SONG) 61.90p -1.12%