London open: Stocks fall amid inflation concerns; jobs data in focus

London stocks fell in early trade on Tuesday amid ongoing worries about inflation, as investors digested the latest UK jobs data.

At 0835 BST, the FTSE 100 was down 0.7% at 7,095.44.

Jeffrey Halley, senior market analyst at Oanda, said: "Despite US bond markets being closed for Columbus Day, inflation nerves continued to rattle market nerves driven by energy prices, which surged once again overnight.

"Equity markets retreated and the US dollar resumed its climb as inflation looks less transitory and more embedded by the day. Goldman Sachs downgraded its US growth forecasts overnight, and the quarterly earnings season, which starts this week, has equity markets on edge over whether profit forecasts will be tempered for 2022 given the rich valuations prevalent in stocks everywhere. Add in the creeping, but relentless implications of the Fed taper and it is no surprise that equity markets remain on edge."

News that Chinese property group Evergrande had missed its third round of bond payments in three weeks added to the downbeat mood.

On home shores, figures released earlier by the Office for National Statistics showed that job vacancies hit a 20-year high between July and September. They rose by 318,000 from pre-pandemic January to March 2020 levels to 1.1 million, with accommodation and food services seeing a near-50,000 jump.

Meanwhile, the unemployment rate fell to 4.5% in the three months to August from 4.6% in the three months to July.

Data also showed that the number of payroll employees rose in September by 207,000 to a record 29.2m, and is now higher than it was before the pandemic.

Darren Morgan, director of economic statistics at the ONS, said: "The jobs market has continued to recover from the effects of the coronavirus, with the number of employees on payroll in September now well exceeding pre-pandemic levels.

"The latest earnings continue to show growth on the year, even after taking inflation into account.

"However, the figures are still being affected by special factors that make it hard to read underlying trends."

Paul Dales, chief UK economist at Capital Economics, said: "The further rise in vacant positions to a new record high of 1.102m suggests that demand for workers remains strong. But crucially evidence from other surveys suggests that vacancies are high partly because employers are finding it increasingly hard to find workers.

"So there’s no real signs in this release that the labour shortages have started to ease. The end of the furlough scheme will probably help, but we’re increasingly of the view that labour shortages will last at least until the middle of next year.

"Meanwhile, the distortions from the furlough scheme and the change in the composition of employment that have boosted average earnings growth have now started to ease."

In equity markets, low-cost airline easyJet flew lower despite saying it turned cash positive in the final quarter of its fiscal year, driven by an improvement in intra-European and UK domestic travel as Covid lockdown measures eased. The carrier said it generated £40m in cash in the three months to September 30. It expects a headline pre-tax loss of £1.14bn - £1.17bn compared to consensus of £1.175bn.

Elsewhere, gambling firm Entain was little changed after it said third-quarter revenue rose, with in-shop volumes improving as Covid lockdown measures were lifted.

Market Movers

FTSE 100 (UKX) 7,095.44 -0.72%
FTSE 250 (MCX) 22,349.72 -0.61%
techMARK (TASX) 4,513.19 -0.67%

FTSE 100 - Risers

Bunzl (BNZL) 2,413.00p 0.67%
Severn Trent (SVT) 2,620.00p 0.27%
Coca-Cola HBC AG (CDI) (CCH) 2,384.00p 0.25%
BAE Systems (BA.) 586.00p 0.03%
B&M European Value Retail S.A. (DI) (BME) 565.00p 0.00%
Meggitt (MGGT) 742.40p -0.03%
Morrison (Wm) Supermarkets (MRW) 285.30p -0.04%
Fresnillo (FRES) 810.60p -0.10%
National Grid (NG.) 886.00p -0.10%
Royal Dutch Shell 'B' (RDSB) 1,737.80p -0.13%

FTSE 100 - Fallers

Anglo American (AAL) 2,778.00p -1.87%
Rio Tinto (RIO) 5,010.00p -1.78%
Intermediate Capital Group (ICP) 1,999.50p -1.70%
Prudential (PRU) 1,463.00p -1.68%
JD Sports Fashion (JD.) 1,009.50p -1.61%
Melrose Industries (MRO) 162.60p -1.54%
Royal Mail (RMG) 405.90p -1.38%
Hikma Pharmaceuticals (HIK) 2,289.00p -1.38%
HSBC Holdings (HSBA) 425.05p -1.33%
Johnson Matthey (JMAT) 2,613.00p -1.32%

FTSE 250 - Risers

TUI AG Reg Shs (DI) (TUI) 278.80p 12.77%
Spire Healthcare Group (SPI) 221.00p 1.38%
ICG Enterprise Trust (ICGT) 1,152.00p 1.05%
Britvic (BVIC) 868.00p 1.05%
HGCapital Trust (HGT) 389.00p 1.04%
Baillie Gifford Japan Trust (BGFD) 1,010.00p 1.00%
Liontrust Asset Management (LIO) 2,005.00p 0.75%
Finsbury Growth & Income Trust (FGT) 865.00p 0.46%
SDCL Energy Efficiency Income Trust (SEIT) 111.50p 0.45%
Petropavlovsk (POG) 21.62p 0.37%

FTSE 250 - Fallers

Baltic Classifieds Group (BCG) 203.00p -4.25%
Endeavour Mining (EDV) 1,825.00p -3.95%
Blackrock Throgmorton Trust (THRG) 890.00p -2.73%
Darktrace (DARK) 809.50p -2.59%
XP Power Ltd. (DI) (XPP) 5,050.00p -2.32%
Ferrexpo (FXPO) 319.20p -2.27%
Virgin Money UK (VMUK) 193.70p -2.17%
Draper Esprit (GROW) 890.00p -1.98%
Cairn Energy (CNE) 190.50p -1.96%
Cineworld Group (CINE) 66.34p -1.89%