London open: Stocks fall as investors eye US inflation data

London stocks fell in early trade on Tuesday following a downbeat session across the pond, as investors mulled the latest UK wage data and eyed a reading on US inflation.

At 0840 BST, the FTSE 100 was down 0.9% at 7,548.74.

Victoria Scholar, head of investment at Interactive Investor, said: "European markets are under pressure, taking their cues from the declines on Wall Street as the market await key inflation data stateside.

"Trading updates and economic data are setting the agenda in the UK with the FTSE 100 under pressure inching towards support at 7,600. Rolls Royce and the LSE are languishing at the bottom of the index while the miners and oil companies like BP, Glencore, Fresnillo and Endeavour eke out modest gains.

"In Germany focus is on the banks with Deutsche Bank and Commerzbank selling off sharply on a report that a key investor is offloading a major stake in both."

On home shores, the latest data from the Office for National Statistics showed that real pay for workers fell for the second month running as wage rises were more than offset by rising inflation.

Regular pay, excluding bonuses, rose 4% in the three months to February. The ONS said pay adjusted for inflation fell 1%. Including bonuses, real pay rose 0.4%.

The figures show incomes being squeezed by rising prices before a further increase that took inflation to 6.2% in March from 5.5% in February. The Bank of England expects inflation to peak at 8% or higher in 2022 and household budgets are also under pressure from tax increases.

Real pay fell despite rising employment. The ONS's labour force survey measure of employment rose by 10,000 in the three months to February but the increase was less than the 52,000 analysts expected on average. The headline three-month average unemployment rate dipped to 3.8% from 3.9% a month earlier in line with expectations.

Laith Khalaf, head of investment analysis at AJ Bell, said the pay data was the "calm before the inflationary storm" with implications for the wider economy.

"This month price rises are going to move up a notch, and really exert pressure on consumer purses, especially when combined with tax and National Insurance increases," Khalaf said.

In equity markets, engine maker Rolls-Royce tumbled after JPMorgan Cazenove downgraded the shares to ‘underweight’ from ‘neutral’ and slashed the price target to 75p from 140p.

EasyJet flew lower even as the low-cost airline reported improved trading in the second quarter after the removal of Covid travel restrictions, and said summer bookings were tracking ahead of pre-pandemic 2019.

On the upside, BAE Systems racked up solid gains after Deutsche Bank lifted its price target on the ‘buy’ rated shares to 860p from 670p.

Diploma rallied after the specialist seals and controls maker said full-year results were expected to "materially exceed" expectations after a strong contribution from acquisitions.

Plus500 advanced after the online trading platform said full-year revenue was set to be ahead of current market expectations as it posted a 68% jump in first-quarter revenues.

Moneysupermarket rose after it posted a jump in first-quarter revenue and reiterated full-year guidance.

Market Movers

FTSE 100 (UKX) 7,548.74 -0.91%
FTSE 250 (MCX) 20,934.75 -0.85%
techMARK (TASX) 4,379.81 -0.70%

FTSE 100 - Risers

BAE Systems (BA.) 773.40p 1.10%
BP (BP.) 390.00p 0.87%
Endeavour Mining (EDV) 1,994.00p 0.45%
Intermediate Capital Group (ICP) 1,684.00p 0.45%
Glencore (GLEN) 522.40p 0.38%
Fresnillo (FRES) 784.80p 0.38%
Rio Tinto (RIO) 6,089.00p 0.31%
Avast (AVST) 555.00p 0.22%
Electrocomponents (ECM) 1,010.00p 0.20%
Meggitt (MGGT) 768.80p 0.10%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 89.45p -5.84%
London Stock Exchange Group (LSEG) 8,072.00p -4.02%
Ocado Group (OCDO) 1,202.00p -2.91%
AstraZeneca (AZN) 10,600.00p -2.38%
Melrose Industries (MRO) 116.20p -2.15%
SSE (SSE) 1,760.50p -2.00%
Informa (INF) 606.00p -1.88%
Admiral Group (ADM) 2,489.00p -1.85%
HSBC Holdings (HSBA) 523.70p -1.80%
National Grid (NG.) 1,198.00p -1.76%

FTSE 250 - Risers

Diploma (DPLM) 2,716.00p 8.12%
Plus500 Ltd (DI) (PLUS) 1,535.00p 3.79%
Tullow Oil (TLW) 57.70p 1.50%
ICG Enterprise Trust (ICGT) 1,156.00p 0.87%
Moneysupermarket.com Group (MONY) 174.50p 0.87%
Capricorn Energy (CNE) 203.40p 0.79%
Centamin (DI) (CEY) 94.78p 0.68%
RIT Capital Partners (RCP) 2,570.00p 0.59%
Energean (ENOG) 1,237.00p 0.57%
SSP Group (SSPG) 231.20p 0.57%

FTSE 250 - Fallers

Investec (INVP) 510.00p -4.99%
Polymetal International (POLY) 264.90p -3.71%
Hammerson (HMSO) 32.36p -3.60%
Wizz Air Holdings (WIZZ) 2,814.00p -3.46%
Baltic Classifieds Group (BCG) 148.00p -3.14%
Future (FUTR) 2,278.00p -3.06%
Bridgepoint Group (Reg S) (BPT) 318.60p -2.98%
Weir Group (WEIR) 1,497.50p -2.73%
888 Holdings (888) 207.80p -2.72%
Wood Group (John) (WG.) 169.75p -2.69%