London close: Stocks finish lower as wage growth eases

Negative sentiment was mirrored across the Atlantic as well, as Wall Street returned from its long weekend in negative territory.

The FTSE 100 closed down by 0.48% at 7,558.34 points, while the FTSE 250 saw a marginal dip of 0.04% to reach 19,193.32 points.

In currency markets, sterling was last down 0.57% on the dollar to trade at $1.2655, while it strengthened 0.08% against the euro to change hands at €1.1632.

“Despite German investor morale hitting an eleven month high, eurozone inflation expectations falling to a near two-year low and slowing UK wage growth, European stock indices saw their second negative session of the week,” said IG senior market analyst Axel Rudolph.

“A reappraisal of the Fed's and ECB's rate cut outlook amid hawkish comments by officials and factory activity in New York shrinking the most since 2020 pushed most US indices down as well.

“Investors will now focus on key China data, UK inflation and US retail sales on Wednesday.”

Rudolph added that a hawkish reassessment of the Fed's monetary policy helped the US dollar index rise to a one-month high, accompanied by a falling gold price.

“Global demand worries outshone concerns regarding a possible escalation in the Middle East and Red Sea conflicts with oil and gas prices slipping.”

UK wage growth eases as unemployment rate remains stable

In economic news, the Office for National Statistics (ONS) reported that UK wage growth in the three months to November eased, while the unemployment rate remained unchanged at 4.2%.

Total pay, including bonuses, increased by 6.5%, down from the previous three-month period's 7.2%, aligning with consensus expectations.

Additionally, the ONS estimated a decrease of 24,000 payrolled employees in December, bringing the total to 30.2 million.

Vacancies also saw a decline, falling by 49,000 to 934,000 in the three months to December, marking the 18th consecutive decrease, the longest recorded.

In Germany, Destatis reported that inflation for December stood at 3.8%, consistent with preliminary data.

Excluding volatile food and energy prices, the consumer price index rose by 5.1% annually. Notably, food prices surged by 12.4% year-on-year, while energy prices increased by 5.3% compared to the previous year.

In November, consumer prices, harmonised for European Union comparison, showed a 2.3% year-on-year rise.

Meanwhile, German business sentiment experienced a boost in January, according to the ZEW Center for European Economic Research.

The ZEW investor expectations index rose to 15.2, up from December's 12.8, surpassing consensus expectations of 12.0.

However, the current conditions index dipped slightly to -77.3 in January, compared to -77.1 the previous month.

On the other side of the Atlantic, the New York Empire State manufacturing index reported a significant drop to -43.7 in January, marking its lowest reading since May 2020.

The decline reflected a sharp contraction in manufacturing activity in the state.

New orders fell to -49.4, and shipments dropped to -31.3, both down from previous readings.

Unfilled orders continued to decrease, and delivery times shortened.

Rightmove falls, Spirent jumps as it ends year in line

On London’s equity markets, Rightmove dropped 4.58% after JPMorgan downgraded it to 'underweight' from ‘neutral’, while Rolls-Royce Holdings faced a decline of 0.6% following a downgrade to 'sell' by Berenberg.

AstraZeneca was off 2.1% after UBS downgraded it to 'sell,' while Moneysupermarket Group slumped 7.07% on the back of a downgrade to 'hold' at Jefferies.

Trustpilot Group saw a 3.21% decrease, as Berenberg sold over 5.17 million shares in the review website on behalf of shareholder Northzone.

On the upside, Ocado Group rose 0.61% after the online grocer forecast a return to positive earnings for the 2023 financial year, with fourth-quarter revenues increasing by nearly 11%.

Experian rallied with a 2.3% increase, narrowing its full-year targets to the upper end of guidance following a strong third quarter, where revenue growth accelerated from the first half.

Vodafone Group nudged up 0.04% after signing a 10-year strategic partnership with Microsoft, involving a $1.5bn investment over the next decade to enhance the customer experience using generative artificial intelligence.

Spirent Communications jumped 10.54% after it reported full-year results in line with revised expectations after a challenging year.

QinetiQ Group rose 5.03% after the defence and security firm backed its full-year expectations, citing "excellent" order intake and announcing plans for a share buyback of up to £100m.

Direct Line Insurance Group received a boost of 1.17% following an upgrade to 'buy' by Berenberg.

Housebuilder Persimmon gained 1.28% after an upgrade to 'buy' from 'hold' by Jefferies, which expressed optimism about the company's potential to benefit from an improving market sentiment.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,558.34 -0.48%
FTSE 250 (MCX) 19,193.32 -0.04%
techMARK (TASX) 4,302.18 0.32%

FTSE 100 - Risers

Experian (EXPN) 3,200.00p 2.37%
Hikma Pharmaceuticals (HIK) 1,970.00p 1.91%
Compass Group (CPG) 2,220.00p 1.37%
Persimmon (PSN) 1,468.50p 1.24%
Burberry Group (BRBY) 1,227.00p 1.24%
Flutter Entertainment (CDI) (FLTR) 13,270.00p 0.91%
Next (NXT) 8,558.00p 0.87%
Spirax-Sarco Engineering (SPX) 9,914.00p 0.85%
Relx plc (REL) 3,224.00p 0.69%
United Utilities Group (UU.) 1,057.50p 0.62%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 107.35p -5.25%
Fresnillo (FRES) 502.80p -4.63%
Rightmove (RMV) 542.80p -3.90%
Standard Chartered (STAN) 589.20p -2.61%
Barclays (BARC) 141.22p -2.59%
International Consolidated Airlines Group SA (CDI) (IAG) 142.10p -2.34%
Centrica (CNA) 146.40p -2.27%
Convatec Group (CTEC) 242.00p -2.02%
Legal & General Group (LGEN) 247.50p -1.98%
AstraZeneca (AZN) 10,646.00p -1.90%

FTSE 250 - Risers

Spirent Communications (SPT) 128.10p 10.62%
Harbour Energy (HBR) 315.00p 6.20%
QinetiQ Group (QQ.) 332.40p 4.46%
Bytes Technology Group (BYIT) 611.00p 3.38%
3i Infrastructure (3IN) 324.50p 3.02%
Genus (GNS) 2,234.00p 2.95%
Diversified Energy Company (DEC) 1,027.50p 2.75%
Bakkavor Group (BAKK) 94.20p 2.61%
AJ Bell (AJB) 298.80p 2.61%
Ferrexpo (FXPO) 73.30p 2.52%

FTSE 250 - Fallers

Moneysupermarket.com Group (MONY) 249.80p -7.00%
Helios Towers (HTWS) 87.30p -4.07%
TUI AG Reg Shs (DI) (TUI) 529.50p -3.99%
Trustpilot Group (TRST) 159.00p -3.75%
Travis Perkins (TPK) 745.00p -3.75%
Hochschild Mining (HOC) 89.15p -3.62%
Crest Nicholson Holdings (CRST) 208.80p -2.79%
Centamin (DI) (CEY) 92.60p -2.58%
Currys (CURY) 46.16p -2.45%
PPHE Hotel Group Ltd (PPH) 1,175.00p -2.08%