London midday: Stocks in the red after Asian losses; jobs data digested

London stocks were off earlier lows but still firmly in the red by midday on Tuesday, having taken their cue from heavy losses in Asia, as investors mulled the latest UK jobs data.

The FTSE 100 was down 0.9% at 7,127.43.

Victoria Scholar, head of investment at Interactive Investor, said: "The bloodbath for Chinese equities extends with the Hang Seng in Hong Kong shedding another 5.7% reaching the lowest close since February 2016. Having slumped 11% on Monday its tech index shed another 8.1% on Tuesday with fears there is more downside to come. More than $460 billion has been wiped from China’s tech sector this year. The negativity has spread beyond China’s borders with chip makers in Europe taking a hit.

"A toxic combination of rising Covid cases and China’s stance towards the Russia-Ukraine conflict have prompted international investors to shun Chinese equities. This prompted a harsh assessment from analysts at JPMorgan which has downgraded 28 Chinese internet companies including Alibaba and Tencent to underweight, labelling them as ‘uninvestable’ over the next 12 months."

Investors were also digesting news that the UK government has imposed further sanctions on Russia, announcing a ban on exports of some luxury goods and a 35% tariff on a variety of goods imported from there.

On the macro front, figures released earlier by the Office for National Statistics showed that unemployment has fallen to pre-pandemic levels, but wages are struggling to keep up with soaring inflation.

Data showed there was both an increase in employment and a decrease in unemployment in the three months to the end of January 2022.

The headline unemployment rate was 3.9%, 0.2 percentage points lower than the previous three-month period, returning it to pre-pandemic levels. It was also below the consensus, for 4.0%.

The employment rate was 75.6%, 0.1 percentage points higher than the previous three-month period, but 1.0 percentage points lower than the three months to February 2020.

However, growth in regular pay - which excludes bonuses - was 3.8% in the three months to January 2022, or 4.8% including bonuses. Both rates are below inflation, which reached a 30-year high of 5.5% in the 12 months to January. The Bank of England expects inflation to continue rising, before peaking at over 7% in the spring.

Once adjusted for inflation, growth in total pay was 0.1% while regular pay - which strips out bonuses - was down 1.0% on the year. "Strong bonus payments over the past six months have kept recent real total pay growth positive," the ONS noted.

In equity markets, precious metals miners Polymetal and Fresnillo slid as gold prices fell, while miners Glencore, Rio, Anglo and Antofagasta also lost ground as base metals prices retreated. Gold miner Petropavlovsk - which has operations in Russia - fell sharply.

Asia-focused Prudential and Standard Chartered were among the big fallers on the FTSE 100 as investors fretted about the impact of Covid lockdowns in China and possible sanctions from the US.

TP Icap slid as the inter-dealer broker said revenues were rising in the current fiscal year as market volatility increased over the Ukraine war, but reported an 81% drop in 2021 pre-tax profit.

Close Brothers dropped as the wealth manager reported a small rise in interim profits, helped by growth in its merchant banking operation, offset by a fall in trading at its broking division.

Dr Martens shares tumbled after RBC Capital Markets slashed its price target on the stock to 375p from 525p, pointing to the iconic boot maker’s growth outlook.

On the upside, educational publisher Pearson was the top performer on the FTSE 100. Last Friday, the shares surged as it confirmed it had rejected two preliminary and "highly conditional" takeover approaches from US asset manager Apollo Global Management.

Redde Northgate rallied as the commercial vehicle rental provider said full-year profits were set to be "comfortably ahead" of consensus expectations and announced a £30m share buyback.

Market Movers

FTSE 100 (UKX) 7,127.43 -0.92%
FTSE 250 (MCX) 20,224.24 -1.21%
techMARK (TASX) 4,196.73 -1.08%

FTSE 100 - Risers

Pearson (PSON) 821.20p 7.91%
Informa (INF) 561.60p 2.07%
Reckitt Benckiser Group (RKT) 5,812.00p 2.04%
Relx plc (REL) 2,171.00p 1.78%
National Grid (NG.) 1,142.00p 1.67%
Ashtead Group (AHT) 5,146.00p 1.46%
Severn Trent (SVT) 2,894.00p 1.26%
United Utilities Group (UU.) 1,072.50p 1.04%
Experian (EXPN) 2,909.00p 0.76%
Compass Group (CPG) 1,666.00p 0.70%

FTSE 100 - Fallers

Polymetal International (POLY) 139.60p -17.08%
Fresnillo (FRES) 687.60p -4.71%
Standard Chartered (STAN) 469.10p -4.48%
Prudential (PRU) 1,000.00p -4.21%
Glencore (GLEN) 462.70p -3.91%
Rio Tinto (RIO) 5,100.00p -3.76%
St James's Place (STJ) 1,336.00p -2.91%
Rightmove (RMV) 613.20p -2.73%
Anglo American (AAL) 3,599.50p -2.68%
Antofagasta (ANTO) 1,515.50p -2.60%

FTSE 250 - Risers

Redde Northgate (REDD) 409.50p 8.19%
Biffa (BIFF) 330.50p 2.32%
Euromoney Institutional Investor (ERM) 891.00p 2.06%
Greencore Group (CDI) (GNC) 122.70p 2.00%
Domino's Pizza Group (DOM) 361.80p 1.80%
Computacenter (CCC) 2,686.00p 1.59%
Pennon Group (PNN) 1,029.00p 1.58%
easyJet (EZJ) 513.60p 1.46%
Cineworld Group (CINE) 36.60p 1.44%
Ferrexpo (FXPO) 149.00p 0.95%

FTSE 250 - Fallers

Petropavlovsk (POG) 2.50p -16.67%
TP Icap Group (TCAP) 115.90p -11.53%
Close Brothers Group (CBG) 1,081.00p -10.51%
TI Fluid Systems (TIFS) 184.00p -9.14%
Dr. Martens (DOCS) 213.00p -8.51%
Virgin Money UK (VMUK) 162.75p -8.05%
Currys (CURY) 85.00p -8.01%
Aston Martin Lagonda Global Holdings (AML) 822.20p -6.50%
Beazley (BEZ) 405.80p -6.39%
Hochschild Mining (HOC) 122.70p -5.47%