London midday: Stocks maintain modest gains after mixed jobs report

Stocks in London were holding on to modest gains by midday on Wednesday as investors mulled a mixed UK jobs report.

The FTSE 100 was up 0.2% to 7,377.16, while the pound gave up earlier gains against the dollar and the euro to stand flat at 1.2490 and 1.1777, respectively.

Meanwhile, oil prices gained ground on a report that Saudi Arabia wants to extend the producer agreement to cut production for another six months when OPEC meets in May. West Texas Intermediate was up 0.5% to $53.68 a barrel and Brent crude was 0.6% higher at $56.59, with geopolitical tension in the Middle East also in the mix.

Official data released earlier showed the UK unemployment rate remained steady at 4.7% in the three months to February, as expected, but wage growth slowed to its weakest level in seven months, increasing the pressure on consumers as inflation rises.

While employment was up by 39,000 in the three months to February to 31.84m, this is actually down from a record high of 31.85m in the three months to January, suggesting the labour market may be starting to lose momentum.

More importantly, growth in average weekly earnings excluding bonuses slowed to 2.2% in the three month period compared to the same period a year ago, down from the 2.3% rate announced a month ago but higher than the 2.1% consensus forecast. On a single-month basis, pay growth fell back to 1.9% from 2.2% in January.

So, despite the tightening of the labour market, the pressure is not feeding through to wages and means growth remained below the 2.3% rate of CPI inflation for a second month.

Including bonuses, average wages rose 2.3%, accelerating from 2.2% a month before and on a single month basis, but the jump was driven almost entirely by an unusually low level of bonuses in the financial sector a year ago.

The March claimant count revealed a 25,000 drop to 765,400, the Office for National Statistics said, with the claimant count rate of 2.2% up from 2.1%

Ranko Berich, head of market analysis at Monex Europe, said: "Even though net employment remains very high, today’s labour market data shows that wage growth is not accelerating in response to the recent pickup in inflation. As a result, households are bearing the brunt of the pound’s major fall in purchasing power since Brexit, with negative consequences for consumer spending."

In corporate news, Tesco fell. It reported a 29.9% rise in adjusted group full year operating profits to £1.28bn on the back of a 4.3% increase in group sales to £49.9bn. However, including the costs of the recently announced Serious Fraud Office fine and the accompanying compensation agreement, reported profits fell 39% on a constant currency basis.

With more questions popping up around Tesco's proposed acquisition of Booker, shares in the cash-and-carry and convenience group were knocked lower.

Retailer WH Smith was also in the red despite saying it grew profits 4% in the first half of the year as sales from its travel arm more than offset continued decline of the high street business.

Countryside Properties rallied after it reported a jump in first-half completions as the sales rate rose, its private forward order book reached a record level and the company sounded an upbeat note on its outlook.

Recruiter PageGroup racked up strong gains after it posted a record first-quarter gross profit. Peer Hays rose in tandem.

BHP Billiton declined after it issued a detailed response to the proposals from activist investor Elliott Advisors earlier in the week, saying that Elliott "materially overstates the potential value that could be created".

Engineer Meggitt got a boost as Bank of America Merrill Lynch upgraded the stock to 'buy' from 'neutral'. Rolls-Royce was also on the front foot, mostly likely on read-across from the Meggitt upgrade.

Market Movers

FTSE 100 (UKX) 7,377.16 0.16%
FTSE 250 (MCX) 19,383.93 0.40%
techMARK (TASX) 3,460.01 0.59%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 838.00p 3.39%
Mediclinic International (MDC) 736.00p 1.73%
Reckitt Benckiser Group (RB.) 7,516.00p 1.69%
BAE Systems (BA.) 650.00p 1.33%
Convatec Group (CTEC) 288.00p 1.27%
GKN (GKN) 357.30p 1.25%
Compass Group (CPG) 1,549.00p 1.04%
Diageo (DGE) 2,313.50p 0.98%
Whitbread (WTB) 4,119.00p 0.98%
Severn Trent (SVT) 2,425.00p 0.96%

FTSE 100 - Fallers

Tesco (TSCO) 184.30p -5.78%
Sainsbury (J) (SBRY) 259.60p -2.04%
Morrison (Wm) Supermarkets (MRW) 232.10p -1.69%
Randgold Resources Ltd. (RRS) 7,515.00p -0.86%
BHP Billiton (BLT) 1,304.50p -0.76%
RSA Insurance Group (RSA) 591.00p -0.76%
Rio Tinto (RIO) 3,252.00p -0.72%
Provident Financial (PFG) 3,103.00p -0.70%
easyJet (EZJ) 1,071.00p -0.65%
Royal Mail (RMG) 414.20p -0.65%

FTSE 250 - Risers

Pagegroup (PAGE) 471.60p 6.24%
Ibstock (IBST) 207.50p 3.59%
Hays (HAS) 168.40p 3.57%
Meggitt (MGGT) 458.90p 2.69%
Amec Foster Wheeler (AMFW) 585.00p 2.63%
CLS Holdings (CLI) 1,970.00p 2.44%
Euromoney Institutional Investor (ERM) 1,109.00p 2.31%
Elementis (ELM) 286.60p 2.25%
Wood Group (John) (WG.) 823.00p 2.17%
Cobham (COB) 141.10p 2.17%

FTSE 250 - Fallers

Booker Group (BOK) 191.90p -5.09%
Vedanta Resources (VED) 790.50p -3.36%
Homeserve (HSV) 630.50p -2.40%
Nostrum Oil & Gas (NOG) 462.40p -2.03%
Hochschild Mining (HOC) 282.30p -1.53%
Daejan Holdings (DJAN) 6,560.00p -1.50%
Sanne Group (SNN) 724.50p -1.50%
WH Smith (SMWH) 1,798.00p -1.48%
AO World (AO.) 136.90p -1.44%
Stagecoach Group (SGC) 208.10p -1.42%