London close: Stocks finish higher after UK, US jobs data

The FTSE 100 index closed up 0.21%, settling at 8,204.89 points, while the FTSE 250 showed a more robust performance, rising by 0.67% to close at 21,234.16 points.

In currency markets, sterling was last down 0.27% on the dollar to trade at $1.2974, while it edged down 0.03% against the euro, changing hands at €1.1889.

“The pockets of strength in the Dow and small caps are being eroded as the risk-off move gathers pace once again,” said IG chief market analyst Chris Beauchamp.

“European markets managed to move higher this morning but the gains are slipping away as the session heads to a close.

“Christine Lagarde’s acknowledgment of growth risks tilted to the downside has put investors in a firmly risk off mood.”

Beauchamp added that Netflix would take centre stage later in the global day, kicking off big tech earnings season.

“It doesn’t look like investors are yet tempted to go bargain hunting in the sector.

“The summer lull will soon be upon markets as well, leaving markets at risk of sudden moves in periods of thinner liquidity.”

US initial jobless claims rise, UK unemployment rate stable

In economic news, the US Labor Department reported an unexpected rise in unemployment benefits claims for the week ended 13 July.

Initial jobless claims increased by 20,000 to 243,000, surpassing market forecasts of 230,000.

It marked a fresh weekly high, suggesting a continued softening of the US labour market.

Continuing claims also rose by 20,000 to 1.86 million, with the four-week moving average up slightly to 234,750.

Notable increases in jobless claims were seen in Texas and California, the former influenced by hurricane Beryl.

Nancy Vanden Houten, lead US economist at Oxford Economics, said the rise in first time claims was notable due to the downward bias in the seasonal adjustment factors applied to the figure.

“Taking a step back from the noise in the data, jobless claims have drifted higher since the start of the year,” she said

“We think the rise so far is consistent with a cooling labour market that is characterised more by a slower pace of hiring rather than by higher layoffs.”

On home shores, UK wage growth slowed to its lowest pace in nearly two years for the three months through May, according to the Office for National Statistics.

Excluding bonuses, annual pay growth was 5.7%, down from 6% in the previous quarter, aligning with economists' expectations. Including bonuses, total earnings also grew by 5.7%, down from 5.9%.

The unemployment rate remained steady at 4.4% in May, as anticipated.

Job vacancies decreased from 905,000 in the three months to May to 889,000 in the three months to June, 32% below their peak in May 2022.

“While the easing in wage growth in May was broadly in line with what the consensus and the Bank of England expected, it probably doesn’t offset the overshoot in services inflation in recent months,” said Ashley Webb, UK economist at Capital Economics.

“As a result, we have changed our forecast for the timing of the first interest rate cut from 5.25% from August to September, although it is a close call.”

On the continent, eurozone construction output declined for the third consecutive month in May, with the annual rate showing the steepest decline in over three years, as per Eurostat data.

Monthly construction output fell by 0.9%, worsening from a 0.4% decline in April.

Year-on-year, output dropped by 2.4%, the sharpest fall since February 2021.

Building construction was down 4.8% from the previous year, while specialised construction activities fell by 1.8%.

Civil engineering production saw a slight increase of 0.4%.

The European Central Bank (ECB) meanwhile decided to keep interest rates unchanged earlier, but indicated the possibility of a rate cut in September.

It noted that while some underlying inflation measures ticked up in May due to one-off factors, most measures stabilised or decreased in June.

Despite high wage growth, restrictive financing conditions and elevated services inflation were highlighted.

ECB President Christine Lagarde said that a rate cut in September remained possible, though no decision had been finalised.

Frasers Group leads gains, Diploma in the red

On London’s equity markets, Frasers Group surged 9.19% after reporting annual profits at the top of its guidance range.

Despite a slight dip in revenues, adjusted pre-tax profits increased by 13% to £544.8m, largely due to fewer exceptional items compared to the previous year.

JD Sports Fashion also saw gains, rising by 3.34%.

Schroders rose by 4.99% following an upgrade from Morgan Stanley, which moved its rating to ‘overweight’ from ‘equal weight’.

Private equity and infrastructure investment firm 3i Group increased 1.34%.

The company reported a promising start to the new financial year, with a 4% rise in net asset value (NAV) over the first quarter.

Dunelm Group advanced by 8.5% after the homewares retailer announced that its full-year pre-tax profit would likely be "slightly ahead" of current market expectations of £200m, thanks to a strong final quarter.

AJ Bell climbed 5.92% as the investment platform reported a 20% year-on-year increase in assets under administration, reaching £83.7bn in the third quarter.

Kier Group was up 2.63%, with the construction firm stating that its full-year revenue and profit would align with market expectations.

The company highlighted a "strong" operational performance and an order book nearing £11 billion.

On the downside, Diploma fell 1.22%.

The distribution group maintained its guidance despite a 13% revenue growth in the nine months ended 30 June.

Babcock International Group dropped 1.06% after Berenberg downgraded the stock from ‘buy’ to ‘hold’.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,204.89 0.21%
FTSE 250 (MCX) 21,234.16 0.67%
techMARK (TASX) 4,798.81 -0.04%

FTSE 100 - Risers

Frasers Group (FRAS) 897.00p 9.19%
Schroders (SDR) 395.20p 4.88%
JD Sports Fashion (JD.) 120.90p 3.64%
WPP (WPP) 747.00p 2.84%
NATWEST GROUP (NWG) 336.30p 2.41%
British American Tobacco (BATS) 2,556.00p 2.36%
Persimmon (PSN) 1,536.00p 2.30%
Burberry Group (BRBY) 752.00p 2.23%
Sainsbury (J) (SBRY) 271.00p 1.80%
Severn Trent (SVT) 2,565.00p 1.79%

FTSE 100 - Fallers

Antofagasta (ANTO) 1,899.50p -4.93%
Melrose Industries (MRO) 545.60p -3.77%
easyJet (EZJ) 468.70p -3.68%
Smurfit Westrock (DI) (SWR) 3,611.00p -3.24%
Rolls-Royce Holdings (RR.) 434.60p -2.82%
Flutter Entertainment (DI) (FLTR) 15,405.00p -2.68%
InterContinental Hotels Group (IHG) 8,176.00p -2.57%
Airtel Africa (AAF) 117.00p -1.85%
Glencore (GLEN) 450.90p -1.66%
Rightmove (RMV) 570.20p -1.55%

FTSE 250 - Risers

Ocado Group (OCDO) 392.50p 9.79%
Dunelm Group (DNLM) 1,200.00p 8.50%
AJ Bell (AJB) 420.50p 5.92%
Kainos Group (KNOS) 1,112.00p 5.70%
Alpha Group International (ALPH) 2,530.00p 4.12%
Dr. Martens (DOCS) 74.25p 3.99%
Pets at Home Group (PETS) 312.80p 3.64%
WH Smith (SMWH) 1,277.00p 3.15%
Target Healthcare Reit Ltd (THRL) 82.10p 3.14%
Abrdn (ABDN) 172.00p 3.12%

FTSE 250 - Fallers

Ninety One (N91) 168.80p -3.76%
Allianz Technology Trust (ATT) 370.00p -3.14%
Wetherspoon (J.D.) (JDW) 750.00p -2.60%
Indivior (INDV) 809.50p -2.59%
Bytes Technology Group (BYIT) 482.20p -2.55%
FirstGroup (FGP) 171.10p -2.39%
Polar Capital Technology Trust (PCT) 3,160.00p -2.32%
Mitchells & Butlers (MAB) 296.50p -2.31%
Cranswick (CWK) 4,500.00p -2.17%
Twentyfour Income Fund Limited Ord Red (TFIF) 104.60p -1.88%