London midday: Stocks rise as investors weigh mixed UK jobs report

London stocks advanced on Wednesday as investors weighed a mixed UK jobs report and awaited the Federal Reserve’s latest interest rate decision.

The UK added 55,000 jobs in the three months to April, missing expectations for 60,000 jobs but more than the previous period’s 44,000, the Office for National Statistics revealed. The jobless rate, however, unexpectedly fell to 5.0% from 5.1%.

Average weekly earnings also beat forecasts, rising an unchanged 2.0% year-on-year during the quarter against expectations for a 1.7% increase.

Jobless claims in May fell by 400, compared to analysts’ estimates for no change and the previous month’s 6,400 rise. The claimant count last month climbed 2.2% in May, the same rate of growth as April but below projections for a 2.1% gain.

Howard Archer, chief UK and European economist at IHS, said the gap between earnings growth and consumer price inflation is down from peak levels seen around August and September, thereby diluted consumers’ purchasing power.

“Earnings growth at 2.0% in the three months to April is still below the level (at least 3.0%) that the Bank of England believes is consistently needed to get consumer price inflation up towards its 2.0% target level,” he said.

“With the labour market relatively tight, recruitment difficulties in some sectors and the National Living Wage taking effect in April, IHS thinks it is likely that earnings growth will gradually pick up further over the coming months – however the pick-up does now look likely to be gradual in the near term at least.”

Elsewhere, China’s banks extended 985.5bn yuan in new yuan loans in May, exceeding analysts' expectations of 750bn yuan and well above the previous month's levels of 55.6bn.

The move came as the central bank has pledged to keep policy accommodative to support the slowing economy.

In the eurozone, the trade surplus widened in April, according to the latest figures from Eurostat. Exports were up 4.9% from March and imports increased 2.6%, meaning the trade surplus widened to a seasonally-adjusted €28bn from €23.7bn in March, which was above economists’ expectations of €21.5bn.

Meanwhile, Brexit news remained under watch as chancellor George Osborne warned that a vote by Britain to leave the European Union in the 23 June referendum would prompt an emergency budget of spending cuts and tax increases to cope with a recession.

However shadow chancellor John McDonnell said the Labour Party would never support Osborne's proposed post-Brexit emergency budget.

Capital Economics said: “Today’s warnings from the ‘Remain’ camp that the government would ramp up austerity immediately in a post-Brexit emergency Budget do not look very plausible. It is more likely that the Government would support the economy by loosening fiscal policy.”

Separately, the Economist Intelligence Unit also forecast that the pound would fall 14-15% against the dollar if Britain exits the EU.

Still to come, the Federal Reserve is expected to sit tight on interest rates in its policy decision at 1900 BST amid uncertainty surrounding Britain’s EU referendum on 23 June and following weak employment data for May.

While the Fed is not expected to raise rates on Wednesday, chair Janet Yellen’s post-meeting press conference may give clues on the timing of the next hike.

"Fed President Janet Yellen’s biggest problem now is trying to reorientate market expectations about not only the potential rate path for this year, but also the US economy as well," said Michael Hewson, chief market analyst at CMC Markets.

In commodities, oil prices dropped on concerns about the global supply glut with Brent crude down 1.2% to $49.21 per barrel and West Texas Intermediate down 0.83% to $48.09 per barrel at 1200 BST.

On the corporate front, mining stocks rallied as copper prices jumped with Antofagasta, Glencore and Anglo American leading the rise.

Aveva Group slumped after it walked away from a second round of talks with French suitor Schneider Electric and has applied for its share to resume trading after their suspension.

Luxury goods maker Jimmy Choo gained after saying it had made a good start to the year and trading was in line with expectations despite headwinds facing the majority of the sector in 2016.

Housebuilders continued to fall on Brexit fears with Berkeley Group and Taylor Wimpey in the red.

Market Movers

FTSE 100 (UKX) 5,975.16 0.87%
FTSE 250 (MCX) 16,292.57 0.37%
techMARK (TASX) 2,982.48 0.49%

FTSE 100 - Risers

Antofagasta (ANTO) 418.00p 5.96%
Glencore (GLEN) 134.75p 5.15%
Anglo American (AAL) 628.30p 4.80%
Tesco (TSCO) 152.15p 3.26%
Rio Tinto (RIO) 1,957.00p 3.24%
Burberry Group (BRBY) 1,074.00p 3.17%
Standard Chartered (STAN) 506.70p 2.93%
Mediclinic International (MDC) 888.00p 2.54%
Morrison (Wm) Supermarkets (MRW) 178.20p 2.41%
Diageo (DGE) 1,788.00p 2.29%

FTSE 100 - Fallers

Whitbread (WTB) 3,834.00p -1.89%
Berkeley Group Holdings (The) (BKG) 2,941.00p -1.64%
Paddy Power Betfair (PPB) 8,840.00p -1.50%
Taylor Wimpey (TW.) 171.00p -1.21%
Royal Dutch Shell 'B' (RDSB) 1,725.00p -0.78%
Royal Dutch Shell 'A' (RDSA) 1,712.50p -0.55%
Sage Group (SGE) 603.00p -0.25%
Inmarsat (ISAT) 693.50p -0.22%
Ashtead Group (AHT) 983.50p -0.20%
Old Mutual (OML) 171.50p -0.17%

FTSE 250 - Risers

Jimmy Choo (CHOO) 109.40p 14.02%
Indivior (INDV) 223.10p 4.30%
Go-Ahead Group (GOG) 2,077.00p 4.11%
OneSavings Bank (OSB) 298.70p 4.00%
Ocado Group (OCDO) 225.10p 3.40%
Vedanta Resources (VED) 385.00p 3.22%
Aberdeen Asset Management (ADN) 255.50p 3.15%
Hastings Group Holdings (HSTG) 184.20p 3.14%
Evraz (EVR) 121.40p 2.88%
Drax Group (DRX) 305.30p 2.83%

FTSE 250 - Fallers

Aveva Group (AVV) 1,619.00p -12.70%
FirstGroup (FGP) 105.40p -3.57%
Allied Minds (ALM) 330.40p -2.71%
Essentra (ESNT) 508.50p -2.02%
NMC Health (NMC) 1,091.00p -1.98%
Ophir Energy (OPHR) 68.05p -1.66%
AO World (AO.) 149.00p -1.59%
Aldermore Group (ALD) 188.80p -1.46%
Softcat (SCT) 347.90p -1.42%
St. Modwen Properties (SMP) 297.70p -1.13%