London open: Stocks little changed after UK jobs data, ahead of US inflation

London stocks were little changed in early trade on Tuesday as investors mulled the latest UK jobs data and looked ahead to the release of US inflation figures.

At 0830 BST, the FTSE 100 was down just 0.1% at 7,464.50.

Data released earlier by the Office for National Statistics showed that real wages continued to fall in July, while the jobless rate dipped to its lowest level since 1974 as more people dropped out of the workforce.

The unemployment rate fell to 3.6% in the three months to July from 3.8% in the previous quarter. Economists were expecting the rate to be unchanged.

The number of people in employment grew by 40,000 in the three-month period. This was the smallest increase since February and was well below consensus expectations for a 128,000 jump. The UK workforce remains 250,000 smaller than it was before the pandemic hit.

Meanwhile, total pay including bonuses rose 5.5% on the year, up from 5.2% and versus expectations of 5.4% growth. Meanwhile, regular pay grew 5.2%, up from 4.7% and compared to consensus expectations of 5.1% growth.

In real terms, however, total pay fell 2.6% and regular pay was down 2.8%.

Oanda market analyst Craig Erlam said: "It's not often that you see the unemployment rate fall to the lowest in almost 50 years and aren't overjoyed, but that will certainly be the feeling at the Bank of England right now.

"Less labour market slack and faster wage growth increase the odds of a 75-basis point hike from the Monetary Policy Committee next week, especially against the backdrop of higher core inflation expectations over the medium term as a result of the new cap on energy bills."

Still to come on the macro front, the US consumer price index for August is due at 1330 BST.

Erlam said: "Perhaps last month's report has given investors confidence that another faster deceleration could be on the cards for July.

"That may sound premature but the fact is that two consecutive reports showing a sharp deceleration combined with last month's goldilocks jobs report will be a really encouraging sign and could trigger a broader risk rebound in the markets. It may not be enough to tip the Fed balance in favour of a more modest 50 basis point rate hike next week but it may slow the pace of tightening thereafter."

In equity markets, software company Aveva rallied following a report it is closing in on a takeover agreement with French industrial group Schneider Electric worth about £9bn. According to Sky News, the boards of the two companies and their advisers are discussing a price of more than £30-a-share for Schneider to acquire the roughly-40% of Aveva it does not already own.

Media company Future was in the black after it said full-year adjusted operating profits were set to be at the top end of market expectations.

Ladbrokes owner Entain was also on the rise after an upgrade to ‘buy’ at HSBC.

On the downside, Ocado tumbled after the online supermarket warned of a fall in annual sales as customers start to tighten their belts amid the cost-of-living crisis.

Market Movers

FTSE 100 (UKX) 7,464.50 -0.11%
FTSE 250 (MCX) 19,508.98 -0.03%
techMARK (TASX) 4,363.97 -0.07%

FTSE 100 - Risers

Aveva Group (AVV) 3,057.00p 3.31%
Whitbread (WTB) 2,731.00p 2.17%
Halma (HLMA) 2,224.00p 1.28%
Fresnillo (FRES) 760.60p 1.09%
Croda International (CRDA) 7,104.00p 1.08%
Harbour Energy (HBR) 484.50p 0.92%
Burberry Group (BRBY) 1,787.50p 0.82%
Rentokil Initial (RTO) 559.20p 0.79%
Dechra Pharmaceuticals (DPH) 3,334.00p 0.73%
Spirax-Sarco Engineering (SPX) 11,135.00p 0.68%

FTSE 100 - Fallers

Ocado Group (OCDO) 708.60p -10.89%
Tesco (TSCO) 248.10p -1.98%
Sainsbury (J) (SBRY) 209.80p -1.69%
Kingfisher (KGF) 252.60p -1.67%
Standard Chartered (STAN) 619.60p -1.21%
Howden Joinery Group (HWDN) 609.80p -1.17%
Hikma Pharmaceuticals (HIK) 1,301.50p -1.10%
Taylor Wimpey (TW.) 109.45p -1.08%
Vodafone Group (VOD) 109.40p -1.05%
Lloyds Banking Group (LLOY) 46.49p -1.00%

FTSE 250 - Risers

Future (FUTR) 1,796.00p 4.30%
Coats Group (COA) 60.90p 2.01%
Home Reit (HOME) 118.80p 1.89%
JPMorgan Global Growth & Income (JGGI) 445.00p 1.83%
Weir Group (WEIR) 1,571.50p 1.42%
Kainos Group (KNOS) 1,476.00p 1.37%
888 Holdings (DI) (888) 128.00p 1.35%
Templeton Emerging Markets Inv Trust (TEM) 151.80p 1.34%
BlackRock Smaller Companies Trust (BRSC) 1,376.00p 1.33%
Clarkson (CKN) 2,805.00p 1.26%

FTSE 250 - Fallers

NCC Group (NCC) 229.50p -4.38%
Genus (GNS) 2,788.00p -3.46%
Marks & Spencer Group (MKS) 122.55p -3.28%
Ferrexpo (FXPO) 169.70p -2.30%
Murray International Trust (MYI) 1,250.00p -2.04%
Oxford Instruments (OXIG) 2,125.00p -1.85%
Allianz Technology Trust (ATT) 243.00p -1.82%
Petrofac Ltd. (PFC) 121.20p -1.78%
Wood Group (John) (WG.) 142.20p -1.52%
Vistry Group (VTY) 789.00p -1.38%