London open: Banks pace the decline after Barclays update

London stocks fell in early trade on Tuesday, with banks under the cosh after a disappointing update from Barclays, as investors mulled the latest UK jobs data.

At 0900 BST, the FTSE 100 was down 0.3% at 7,351.50.

Figures released earlier by the Office for National Statistics showed that the unemployment rate ticked up to 4.2% in the three months to August from 4.0% in the three months to July. This was the ONS’ first month using new methodology to calculate the rate.

The ONS explained that due to increased uncertainty around the Labour Force Survey (LFS) estimates, it was publishing an alternative series of estimates of employment, unemployment, and economic inactivity as experimental statistics.

The experimental figures were derived using growth rates from pay as you earn real-time information and the claimant count for the periods from May to July 2023 onwards.

"This is to provide a more holistic view of the state of the labour market while the LFS estimates are uncertain," it said.

The data also showed that the employment rate declined by 0.3 percentage point to 75.7%, while employment fell by 82,000 following a 133,000 drop in the previous quarter (-207,000 on the old series).

ONS director of economic statistics Darren Morgan said: "Today we have produced a new metric, produced by adjusting our headline survey estimates using robust administrative data sources that we receive from other government departments. This maintains the accuracy of our key statistics.

"This new metric shows that in the latest period the employment rate was down a little, with small rises in the rates for both unemployment and those neither working nor looking for work."

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: "The ONS’ experimental estimates of the labour market data continue to suggest that labour market slack is developing more quickly that the MPC expected in August’s Monetary Policy Report, adding to the evidence the Committee will keep Bank Rate at 5.25% at next month’s meeting."

Still to come, the S&P Global/CIPS services and manufacturing PMIs for October are due out at 0930 BST.

In equity markets, Barclays slid as its third-quarter headline profits beat analysts' forecasts, but the bank cut its guidance for retail banking net interest margin (NIM) for 2023. The full-year net interest margin - the difference between interest income and the amount it pays back in interest on deposits - was revised to 3.05-3.10%, from earlier guidance of 3.15-3.20%.

Other banks followed suit, with NatWest, Lloyds and Standard Chartered all down.

Bunzl lost ground as it backed full-year guidance for adjusted operating profit but reported a decline in third-quarter sales and said full-year revenue was expected to be "slightly lower" than in 2022 at constant exchange rates.

CAB Payments tanked as the payment processing firm warned on full-year revenues, pointing to changes in market conditions in some of its key currency corridors, as well as ongoing uncertainties surrounding the Naira. Based on the revenue run rate up to now in the fourth quarter, CAB Payments expects group revenue for 2023 to be at least 20% ahead of the prior year, which would mean it was down 17% on previous guidance.

Softcat was sharply lower after final results, while Pets at Home was dented by a downgrade to ‘hold’ from ‘buy’ at Shore Capital.

On the upside, Plus500 surged to the top of the FTSE 250 after saying it was on track to deliver revenue and EBITDA for full-year 2023 in line with recently-upgraded market expectations.

Market Movers

FTSE 100 (UKX) 7,351.50 -0.32%
FTSE 250 (MCX) 17,034.65 -0.14%
techMARK (TASX) 4,006.44 -0.10%

FTSE 100 - Risers

Airtel Africa (AAF) 115.50p 3.13%
Rio Tinto (RIO) 4,946.00p 1.13%
BT Group (BT.A) 111.95p 1.13%
Antofagasta (ANTO) 1,310.00p 1.00%
AstraZeneca (AZN) 10,196.00p 0.95%
International Consolidated Airlines Group SA (CDI) (IAG) 143.20p 0.92%
BP (BP.) 536.00p 0.71%
Halma (HLMA) 1,855.00p 0.54%
United Utilities Group (UU.) 1,016.00p 0.40%
JD Sports Fashion (JD.) 128.85p 0.39%

FTSE 100 - Fallers

Barclays (BARC) 133.56p -7.28%
Bunzl (BNZL) 2,772.00p -4.87%
NATWEST GROUP (NWG) 208.00p -3.39%
Lloyds Banking Group (LLOY) 40.55p -2.09%
St James's Place (STJ) 623.60p -2.07%
Kingfisher (KGF) 200.10p -1.91%
Standard Chartered (STAN) 703.80p -1.90%
Ocado Group (OCDO) 496.90p -1.68%
Melrose Industries (MRO) 452.40p -1.35%
RS Group (RS1) 655.80p -1.32%

FTSE 250 - Risers

Plus500 Ltd (DI) (PLUS) 1,424.00p 8.95%
Volution Group (FAN) 360.00p 4.41%
Ibstock (IBST) 126.50p 2.43%
TUI AG Reg Shs (DI) (TUI) 413.40p 2.43%
Bakkavor Group (BAKK) 92.00p 2.22%
PZ Cussons (PZC) 137.80p 2.07%
Auction Technology Group (ATG) 570.00p 1.97%
LXI Reit (LXI) 85.50p 1.79%
Wizz Air Holdings (WIZZ) 1,614.00p 1.67%
TR Property Inv Trust (TRY) 260.00p 1.56%

FTSE 250 - Fallers

CAB Payments Holdings (CABP) 92.50p -57.27%
Softcat (SCT) 1,274.00p -9.32%
Hipgnosis Songs Fund Limited NPV (SONG) 72.80p -3.45%
Pets at Home Group (PETS) 295.80p -3.02%
Virgin Money UK (VMUK) 149.75p -3.01%
Tyman (TYMN) 234.50p -2.09%
Mobico Group (MCG) 60.40p -1.79%
Polar Capital Technology Trust (PCT) 2,140.00p -1.61%
Spirent Communications (SPT) 95.10p -1.55%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 76.50p -1.54%