London midday: Stocks fall after UK jobs data, before Fed rate decision

London stocks were in the red on Wednesday as investors weighed up the latest UK jobs report and looked ahead to the Federal Reserve’s interest rate decision.

The FTSE 100 fell 0.11% to 6,960.73 points at 1159 GMT.

While the UK unemployment rate remained flat at 4.8% in the three months to October and wages spiked, more timely official figures showed a rise in the claimant count which led some economists to say that cracks were beginning to appear in the labour market.

The Office for National Statistics revealed the November UK claimant count increased by 2,400, following the 13,000 jump in October to take the claimant count level of unemployment up to 809,000, which is the highest level since February 2015. Economist had expected a 6,500 increase.

The number of people in employment dropped 6,000 in the three months to October, the first fall since early last year and well short of the consensus estimate of a 50,000 rise.

Average weekly earnings, including bonuses, rose by an annual 2.5% in the three months to October, compared with 2.4% in the three months to September and analysts' forecasts for a 2.3% gain.

“While the unemployment rate remained unchanged at 4.8%, for the first time in more than a year the amount of people in work actually fell, if admittedly by a meagre 6,000,” said Connor Campbell , financial analyst at Spreadex.

“Wages, including bonuses, rose 2.5% for the three months to the end of October; growth that probably won’t be high enough to mitigate the continued rise in inflation set to leak into 2017.”

Looking ahead, the Federal Reserve will announce its latest policy decision at 1900 GMT, with most economists expecting an increase in interest rates to a range of 0.50% and 0.75% from the current 0.25% to 0.50%.

Craig Erlam, senior market analyst at Oanda, said: “It would seem the promise of government spending in the coming years has made investors less anxious about the prospect of interest rate increases, although as always it’s a matter of pace more so than the actual act of tightening which is what makes the projections, dot plot and press conference so important today.

“Given the already tightening labour market and improving wage and inflation environment, the prospect of fiscal stimulus and the rise in oil prices, it will be interesting to see just how hawkish the Fed’s projections will be.

“I think Yellen will be keen to avoid spooking the market, especially at this time of year, but the forecasts may come as a surprise to investors, with markets currently pricing in only one rate hike by November.”

The US also sees the release of retail sales figures at 1330 GMT followed by industrial and manufacturing production data at 1415 GMT and business inventories at 1500 GMT.

Meanwhile, oil prices slipped after the American Petroleum Institute reported an increase in crude inventories by 4.7 million barrels in the week to 9 December, compared to expectations for a decline of 1.6 million barrels.

Brent crude fell 1.2% to $55.01 per barrel and West Texas Intermediate slid 1.5% to $52.19 per barrel at 1134 GMT.

Official data on weekly crude inventories from the Energy Information Administration will be released at 1530 GMT.

In corporate news, Dixons Carphone slumped despite reporting a bigger-than-expected jump in first-half profits and upping its dividend as it said it was preparing for “more uncertain times ahead" as the UK exits from the EU.

Software product group Micro Focus International was in the black after reporting a rise in revenue and pre-tax profit for the first half.

Barclays shares were under pressure as Exane downgraded the stock to ‘neutral’ from ‘outperform’.

Wizz Air descended after the budget airline said chief financial officer Sonia Jerez Burdeus has resigned to relocate back to Spain.

Market Movers

FTSE 100 (UKX) 6,957.80 -0.15%
FTSE 250 (MCX) 17,647.63 -0.38%
techMARK (TASX) 3,292.00 -0.03%

FTSE 100 - Risers

Micro Focus International (MCRO) 2,263.00p 6.24%
Polymetal International (POLY) 785.50p 3.76%
Lloyds Banking Group (LLOY) 63.96p 2.25%
Anglo American (AAL) 1,201.50p 1.95%
Fresnillo (FRES) 1,158.00p 1.58%
Sainsbury (J) (SBRY) 249.40p 1.46%
Whitbread (WTB) 3,508.00p 1.39%
Hargreaves Lansdown (HL.) 1,231.00p 1.32%
Standard Chartered (STAN) 675.90p 1.15%
Tesco (TSCO) 207.10p 1.10%

FTSE 100 - Fallers

Dixons Carphone (DC.) 341.60p -6.84%
3i Group (III) 672.00p -2.61%
Royal Mail (RMG) 442.80p -2.21%
Worldpay Group (WPG) 262.20p -1.87%
Barratt Developments (BDEV) 452.30p -1.84%
Mondi (MNDI) 1,555.00p -1.83%
Antofagasta (ANTO) 725.00p -1.83%
Persimmon (PSN) 1,670.00p -1.71%
Barclays (BARC) 226.90p -1.39%
Burberry Group (BRBY) 1,454.00p -1.36%

FTSE 250 - Risers

IG Group Holdings (IGG) 470.50p 4.39%
Acacia Mining (ACA) 393.20p 2.32%
Ladbrokes Coral Group (LCL) 118.50p 2.16%
Evraz (EVR) 261.40p 1.91%
Aveva Group (AVV) 1,822.00p 1.84%
Telecom Plus (TEP) 1,228.00p 1.82%
Petrofac Ltd. (PFC) 930.00p 1.69%
Spire Healthcare Group (SPI) 351.90p 1.62%
Ocado Group (OCDO) 252.20p 1.41%
B&M European Value Retail S.A. (DI) (BME) 264.40p 1.38%

FTSE 250 - Fallers

Indivior (INDV) 276.90p -3.62%
JD Sports Fashion (JD.) 325.80p -3.47%
NMC Health (NMC) 1,400.00p -3.31%
Thomas Cook Group (TCG) 86.25p -2.87%
Balfour Beatty (BBY) 272.00p -2.86%
Berkeley Group Holdings (The) (BKG) 2,739.00p -2.80%
Wizz Air Holdings (WIZZ) 1,798.00p -2.76%
Howden Joinery Group (HWDN) 361.80p -2.74%
Crest Nicholson Holdings (CRST) 446.60p -2.70%
Tate & Lyle (TATE) 666.50p -2.56%