London midday: Stocks gain as UK jobs data exceeds forecasts

London stocks advanced on Wednesday after UK data showed an unexpected drop in the unemployment rate and a better-than-forecast increase in jobs added to the economy.

The unemployment rate in the three months to May fell to 4.9% from 5.0% in the previous quarter, surprising analysts’ who had expected no change, the Office for National Statistics revealed.

UK employers added 176,000 jobs during the period, well above the 71,000 expected and following a 55,000 increase in the three months to April.

Average weekly wages grew in line with forecasts by 2.3%, unchanged from the prior quarter’s growth. However, weekly wages excluding bonuses slowed to 2.2% growth from a previous 2.3%, missing estimates for a 2.4% gain.

The claimant count rate in June was an unchanged 2.2%, as expected. Jobless claims last month rose 400, compared to forecasts for a further 3,500 and May’s 12,200 increase.

While the labour market continued to strengthen in the months prior to the 23 June EU referendum, economist Sam Tombs at Pantheon Macroeconomics said the resilience won’t last.

“Indeed, timelier data show signs of weakness; the claimant count rose by 12.2K month-to-month in May and a further 0.4K in June, and the three-month average level of job vacancies fell in June to its lowest level since November,” he said.

He added: “The tendency for the labour market to lag the economy also means that the referendum’s impact will take several months to emerge.”

Another report showed UK households' financial perceptions worsened substantially in July following Brexit. Markit’s UK Household Finance Index fell from 44.8 in June to 44.3 in July, marking the second-strongest drop since January 2016.

However, income from employment grew at the fastest pace since the survey began in 2009, and 56% of households expect the Bank of England will cut interest rates.

On the company front, Admiral Group shares jumped as UBS upgraded the stock to ‘buy’ from ‘neutral’ and raised the target price to 2,339p from 1,840p.

Anglo American shares were under pressure after the miner cut its full-year copper production guidance.

Fresnillo was another faller - caught up in a minor sector-wide selloff due to lower metal prices - despite strong first-quarter production leading to full year gold guidance being raised.

BHP Billiton declined as it posted its operational review for the year to end-June, confirming it exceeded full-year production guidance for petroleum, copper and metallurgical coal, and achieved record full-year production at Western Australia Iron Ore.

Wizz Air flew higher after reporting a 52.2% jump in first quarter pre-tax profit to €52.3m on higher revenues and an increase in passenger numbers.

However, the low-cost European airline said it has halved its target for second half growth as a direct result of the Brexit vote. Brexit has led to a notable weakness in fares in euro terms on routes to and from the UK, mainly as a result of a weaker pound, Wizz Air explained.

The airline’s remarks sent International Consolidated Airline, easyJet and Thomas Cook into the red. Geopolitical worries amid turmoil in Turkey and recent terror attacks also continued to weigh on the sector.

Market Movers

FTSE 100 (UKX) 6,716.31 0.28%
FTSE 250 (MCX) 17,002.30 0.57%
techMARK (TASX) 3,407.84 0.47%

FTSE 100 - Risers

Legal & General Group (LGEN) 196.00p 2.40%
Admiral Group (ADM) 2,092.00p 2.30%
GKN (GKN) 286.60p 2.21%
Sage Group (SGE) 691.00p 2.14%
Standard Chartered (STAN) 614.60p 2.13%
St James's Place (STJ) 876.50p 2.04%
WPP (WPP) 1,683.00p 1.75%
HSBC Holdings (HSBA) 495.55p 1.73%
Worldpay Group (WI) (WPG) 294.60p 1.62%
British Land Company (BLND) 649.50p 1.48%

FTSE 100 - Fallers

Anglo American (AAL) 755.70p -7.12%
Glencore (GLEN) 175.15p -2.64%
BHP Billiton (BLT) 924.70p -2.51%
Antofagasta (ANTO) 480.40p -2.00%
Rio Tinto (RIO) 2,339.00p -1.60%
Berkeley Group Holdings (The) (BKG) 2,653.00p -1.59%
Tesco (TSCO) 161.50p -1.37%
International Consolidated Airlines Group SA (CDI) (IAG) 418.00p -1.30%
Fresnillo (FRES) 1,853.00p -1.28%
BT Group (BT.A) 388.90p -0.93%

FTSE 250 - Risers

Electrocomponents (ECM) 279.00p 7.97%
Hill & Smith Holdings (HILS) 1,037.00p 5.07%
Workspace Group (WKP) 710.50p 4.56%
OneSavings Bank (OSB) 218.00p 4.31%
Ibstock (IBST) 139.40p 3.57%
NCC Group (NCC) 329.70p 3.00%
Sophos Group (SOPH) 237.70p 2.94%
Wetherspoon (J.D.) (JDW) 800.00p 2.83%
Cranswick (CWK) 2,341.00p 2.81%
Wizz Air Holdings (WIZZ) 1,580.00p 2.40%

FTSE 250 - Fallers

Polymetal International (POLY) 1,064.00p -4.06%
Daejan Holdings (DJAN) 5,365.00p -3.85%
Man Group (EMG) 117.80p -3.68%
Thomas Cook Group (TCG) 62.15p -2.89%
Softcat (SCT) 321.50p -2.31%
Countrywide (CWD) 246.10p -1.99%
Evraz (EVR) 154.90p -1.96%
Crest Nicholson Holdings (CRST) 411.00p -1.84%
Kaz Minerals (KAZ) 134.60p -1.82%
Ashmore Group (ASHM) 348.30p -1.61%