London open: FTSE rallies as wage data raises rate cut expectations

London stocks rose in early trade on Tuesday as a further easing of UK wage growth raised rate cut expectations.

At 0840 GMT, the FTSE 100 was up 0.8% at 7,728.6.

Data released earlier by the Office for National Statistics showed that wage growth slowed again in the three months to January, while the unemployment rate ticked higher.

Average regular pay growth excluding bonuses was 6.1%, down from 6.2% in the previous quarter. This marked the slowest growth in more than a year but was in line with expectations.

Real regular wages, which take into account consumer price inflation, were up 2%. This was the highest since the summer of 2019.

The unemployment rate edged up to 3.9% in the three months to January from 3.8%, versus expectations for it be unchanged.

The data also showed that the number of vacancies fell again, from 928,000 in the three months to January to a 32-month low of 908,000 in the three months to February.

ONS director of economist statistics Liz McKeown said: "Recent trends in the jobs market are continuing, with earnings, in cash terms, growing more slowly than recently but, thanks to lower inflation, real-terms pay continues to increase.

"The number of job vacancies has also been falling for coming up to two years, though the total remains more than 100,000 above its pre-pandemic level.

"Over the last year, there was little change in the proportions of people who are employed, unemployed or neither working nor looking for work, though the overall number of people in work is still rising."

Kathleen Brooks, research director at XTB, said the slowdown in wage growth "has caused traders to reassess their bet that the Bank of England will delay cutting rates until August, and there are growing expectations that the first BOE rate cut will come in June, and that there will be three cuts from the Bank this year".

Still to come on the macro front, all eyes will be on the US consumer price index at 1330 GMT.

Matt Britzman, equity analyst at Hargreaves Lansdown, said: "Markets are looking for a monthly gain of 0.4% and a headline annual figure of 3.1%. There’s not expected to be a cut in US rates until the June meeting, and even that remains on a knife edge. For now, the fact rates will come down at some point seems enough to keep markets happy. But if expectations continue to get pushed back investors will need to face a higher for longer reality."

In equity markets, interdealer broker TP ICAP surged as it posted better-than-expected full-year profits, announced a £30m share buyback and confirmed it was exploring options for its data business Parameta Solutions which could include a potential IPO of a minority stake.

On the downside, housebuilder Persimmon slumped as it warned of continuing tough markets and reported a worse-than-expected 52% decline in full-year profits. Pre-tax profit for the year to December plunged to £351.8m, missing estimates of £359.5m.

Pizza chain Domino's fell even as it reported increased profit, cashflow and shareholder returns in 2023 on the back of solid organic growth, as it announced plans to open 70 new stores in 2024 and hit £2bn in sales within four years.

Pets at Home lost ground after the UK’s Competition and Markets Authority said it had provisionally decided to launch a formal market investigation after a review into the veterinary industry found that pet owners could be paying too much for medicines or prescriptions.

Market Movers

FTSE 100 (UKX) 7,728.61 0.77%
FTSE 250 (MCX) 19,564.92 0.18%
techMARK (TASX) 4,534.06 0.48%

FTSE 100 - Risers

Prudential (PRU) 807.60p 2.46%
BAE Systems (BA.) 1,284.50p 1.94%
Standard Chartered (STAN) 671.80p 1.79%
HSBC Holdings (HSBA) 585.10p 1.62%
Airtel Africa (AAF) 95.30p 1.55%
Smurfit Kappa Group (CDI) (SKG) 3,388.00p 1.44%
Haleon (HLN) 332.05p 1.39%
Sage Group (SGE) 1,246.00p 1.34%
BP (BP.) 478.00p 1.34%
NATWEST GROUP (NWG) 253.20p 1.32%

FTSE 100 - Fallers

Persimmon (PSN) 1,326.00p -3.53%
Fresnillo (FRES) 465.90p -0.83%
Endeavour Mining (EDV) 1,461.00p -0.68%
Croda International (CRDA) 4,711.00p -0.61%
Centrica (CNA) 129.45p -0.58%
Barratt Developments (BDEV) 476.60p -0.36%
Berkeley Group Holdings (The) (BKG) 4,591.00p -0.35%
SSE (SSE) 1,608.50p -0.28%
Taylor Wimpey (TW.) 139.20p -0.14%
Antofagasta (ANTO) 1,823.00p -0.11%

FTSE 250 - Risers

TP Icap Group (TCAP) 219.80p 10.67%
Aston Martin Lagonda Global Holdings (AML) 169.70p 4.05%
Hilton Food Group (HFG) 876.00p 3.30%
Darktrace (DARK) 448.60p 2.84%
Indivior (INDV) 1,690.00p 2.42%
Assura (AGR) 42.70p 2.30%
Asia Dragon Trust (DGN) 368.00p 1.94%
Helios Towers (HTWS) 79.85p 1.91%
Fidelity China Special Situations (FCSS) 197.20p 1.86%
Schroder Asia Pacific Fund (SDP) 495.00p 1.85%

FTSE 250 - Fallers

Domino's Pizza Group (DOM) 344.80p -6.36%
Pets at Home Group (PETS) 261.80p -4.87%
Target Healthcare Reit Ltd (THRL) 79.00p -2.71%
SSP Group (SSPG) 220.40p -2.39%
NB Private Equity Partners Ltd. (NBPE) 1,650.00p -2.37%
International Distributions Services (IDS) 234.80p -1.80%
IntegraFin Holding (IHP) 273.20p -1.80%
Dr. Martens (DOCS) 90.20p -1.80%
Drax Group (DRX) 486.10p -1.56%
Morgan Advanced Materials (MGAM) 265.00p -1.49%