London midday: Stocks nudge down after jobs data

London stocks had edged lower by midday on Tuesday, held back by a stronger pound as a jump in wage growth fuelled expectations of further rates hikes by the Bank of England.

The FTSE 100 was down 0.2% at 7,262.54, while sterling hit a 15-month high against the dollar.

Figures released earlier by the Office for National Statistics showed that wages grew 7.3% in the three months to May, unchanged on the previous month - which was revised up from 7.2% - and coming in above expectations for a 7.1% increase.

The ONS said that for regular pay, this marks the highest growth rate, which was also seen last month and during the Covid pandemic period for April to June 2021.

Including one-off bonuses, wages rose 6.9% during the period, up from 6.7% and versus expectations of 6.8% growth.

The data also showed the unemployment rate was 4% in the three months to May, up from 3.8% in the previous three months.

Russ Mould, investment director at AJ Bell, said: "With sterling at a 15-month high the value of the overseas earnings which dominate the index is relatively less. The reason for the pound’s move higher is today’s UK jobs data.

"While there are some signs the tightness in the labour market is starting to ease, wage growth remains uncomfortably high in the context of the Bank of England’s efforts to get surging prices under control.

"If inflation is like toothpaste, to borrow the well-worn analogy, then the Bank is likely to have to make a big mess of the economy trying to get it back in the tube. Borrowers face more pain with the prospect of further rate hikes to come."

Investors were also mulling a survey from the British Retail Consortium and KPMG, which showed that total retail sales increased by 4.9% in June as the warmer weather brought shoppers out for items such as beach towels and barbeque food.

The rise compared with a fall of 1% in June last year and is above the three-month average growth of 4.6% and the 12-month average growth of 4.0%.

On a like-for-like basis, retail sales increased by 4.2% in June, against a decline of 1.3% in June 2022. Food sales increased 9.8% on a total basis and 10.1% on a Like-for-like basis over the three months to June, while non-food sales rose 0.3% on a total basis and fell 0.5% on a like-for-like basis over the three-months to June.

"Retail sales growth ticked up slightly in June as hot weather prompted purchases of summer essentials. Sun-seekers headed to their favourite retailers to buy swimwear and beach towels, and outdoor games, garden furniture and barbecue food were boosted as families came together to celebrate Father’s Day," said BRC chief executive Helen Dickinson.

However, she added that people were much more cautious about big-ticket purchases like furniture and technology equipment.

"Consumer confidence remains fragile. But, with headline food inflation easing for two months in a row as prices of essentials start to fall thanks to stiff competition and consumers continuing to shift shopping patterns to mitigate as much inflation as they can, confidence could improve."

In equity markets, energy company Centrica reversed earlier small gains after saying it had signed an $8bn deal with US-based Delfin Midstream to buy 1.0 million of liquefied natural gas a year for 15-years.

Melrose spinoff Dowlais slumped as Citi initiated coverage of the stock with a ‘sell’ rating and 97p price target, which implies around 20% downside.

Property owner British Land rallied as it said it continued to see strong operational momentum in the business, despite ongoing macroeconomic uncertainty, with its retail parks proving to be a "winning format".

Market Movers

FTSE 100 (UKX) 7,262.54 -0.15%
FTSE 250 (MCX) 18,140.99 0.63%
techMARK (TASX) 4,312.27 0.11%

FTSE 100 - Risers

Ocado Group (OCDO) 599.40p 3.06%
Land Securities Group (LAND) 577.40p 1.91%
Rio Tinto (RIO) 4,960.50p 1.89%
JD Sports Fashion (JD.) 143.60p 1.81%
Unite Group (UTG) 872.00p 1.75%
SEGRO (SGRO) 717.20p 1.59%
Croda International (CRDA) 5,618.00p 1.41%
Fresnillo (FRES) 611.40p 1.36%
CRH (CDI) (CRH) 4,257.00p 1.33%
Endeavour Mining (EDV) 1,853.00p 1.31%

FTSE 100 - Fallers

AstraZeneca (AZN) 10,022.00p -1.55%
Melrose Industries (MRO) 483.90p -1.55%
Standard Chartered (STAN) 658.60p -1.47%
Convatec Group (CTEC) 197.10p -1.35%
M&G (MNG) 183.55p -1.16%
Rentokil Initial (RTO) 593.60p -1.13%
HSBC Holdings (HSBA) 600.40p -1.07%
United Utilities Group (UU.) 931.60p -1.00%
Rolls-Royce Holdings (RR.) 146.55p -0.91%
InterContinental Hotels Group (IHG) 5,270.00p -0.90%

FTSE 250 - Risers

RHI Magnesita N.V. (DI) (RHIM) 2,844.00p 6.04%
Just Group (JUST) 77.60p 5.15%
Lancashire Holdings Limited (LRE) 610.50p 4.45%
Synthomer (SYNT) 81.90p 4.33%
W.A.G Payment Solutions (WPS) 94.60p 3.96%
NB Private Equity Partners Ltd. (NBPE) 1,544.00p 3.62%
Dr. Martens (DOCS) 125.80p 3.28%
Digital 9 Infrastructure NPV (DGI9) 58.20p 3.19%
Caledonia Investments (CLDN) 3,200.00p 2.89%
Centamin (DI) (CEY) 91.15p 2.88%

FTSE 250 - Fallers

OSB Group (OSB) 349.00p -3.38%
Me Group International (MEGP) 163.80p -1.80%
Trainline (TRN) 254.00p -1.55%
Hikma Pharmaceuticals (HIK) 1,836.00p -1.02%
International Distributions Services (IDS) 229.90p -0.99%
Coats Group (COA) 64.70p -0.92%
Indivior (INDV) 1,756.00p -0.85%
Hipgnosis Songs Fund Limited NPV (SONG) 74.10p -0.80%
Wood Group (John) (WG.) 132.70p -0.75%
Drax Group (DRX) 575.40p -0.69%