London close: Stocks gain after upbeat jobs report

The unemployment rate in the three months to May fell to 4.9% from 5.0% in the previous quarter, surprising analysts’ who had expected no change, the Office for National Statistics revealed.

UK employers added 176,000 jobs during the period, well above the 71,000 expected and following a 55,000 increase in the three months to April.

Average weekly wages grew in line with forecasts by 2.3%, unchanged from the prior quarter’s growth. However, weekly wages excluding bonuses slowed to 2.2% growth from a previous 2.3%, missing estimates for a 2.4% gain.

The claimant count rate in June was an unchanged 2.2%, as expected. Jobless claims last month rose 400, compared to forecasts for a further 3,500 and May’s 12,200 increase.

While the labour market continued to strengthen in the months prior to the 23 June EU referendum, economist Sam Tombs at Pantheon Macroeconomics said the resilience won’t last.

“Indeed, timelier data show signs of weakness; the claimant count rose by 12.2K month-to-month in May and a further 0.4K in June, and the three-month average level of job vacancies fell in June to its lowest level since November,” he said.

He added: “The tendency for the labour market to lag the economy also means that the referendum’s impact will take several months to emerge.”

Another report showed UK households' financial perceptions worsened substantially in July following Brexit. Markit’s UK Household Finance Index fell from 44.8 in June to 44.3 in July, marking the second-strongest drop since January 2016.

However, income from employment grew at the fastest pace since the survey began in 2009, and 56% of households expect the Bank of England will cut interest rates.

In other UK news, the Bank of England´s updated Agents’ Summary of Business Conditions survey for July found there was no clear evidence of a “sharp general slowing” in economic activity post-Brexit. While uncertainty rose markedly after the referendum outcome, firms were looking to continue business as usual.

Elsewhere, Eurozone consumer confidence fell markedly in July, data from the European Commission showed. The flash estimate showed the eurozone consumer index weakened by 0.7 points to -7.9 this month, compared with last month’s figure of -7.2.

Meanwhile, oil prices rebounded after government data showed a drop in US weekly crude inventories. Crude oil stockpiles fell by 2.34m barrels during the week ending on 15 July, according to the Energy Information Administration, beating forecasts for a drop of 2.0m barrels.

Brent crude rose 0.61% to $46.95 per barrel and West Texas Intermediate increased 0.37% to $46.95 per barrel at 1624 BST.

Among corporate stocks, miners were the biggest fallers on the FTSE 100 as metal prices dropped.

“Some investors are no doubt concerned that, despite a longer-term environment that looks more congenial for mining firms, current elevated valuations leave little room for disappointment,” said Chris Beauchamp, senior market analyst at IG. “Still, given a few more days of declines we might see investors looking to buy into weakness, once the newsflow from the sector dries up.”

Anglo American shares were also dragged lower after the miner cut its full-year copper production guidance.

Fresnillo was caught up in a sector-wide selloff despite strong first-quarter production leading to full year gold guidance being raised.

BHP Billiton declined as it posted its operational review for the year to end-June, confirming it exceeded full-year production guidance for petroleum, copper and metallurgical coal, and achieved record full-year production at Western Australia Iron Ore.

On the upside, Admiral Group shares jumped as UBS upgraded the stock to ‘buy’ from ‘neutral’ and raised the target price to 2,339p from 1,840p.

Real estate investors and housebuilders gained, including Land Securities and Persimmon, a day after a report by the Centre for Economics and Business Research (Cebr) consultancy suggested loosening the rules for funding availability for housebuilding.

Market Movers

FTSE 100 (UKX) 6,731.86 0.51%
FTSE 250 (MCX) 17,031.02 0.74%
techMARK (TASX) 3,420.01 0.83%

FTSE 100 - Risers

St James's Place (STJ) 898.00p 4.54%
Legal & General Group (LGEN) 197.30p 3.08%
Sage Group (SGE) 697.00p 3.03%
Admiral Group (ADM) 2,099.00p 2.64%
Standard Chartered (STAN) 617.50p 2.61%
WPP (WPP) 1,696.00p 2.54%
GKN (GKN) 287.40p 2.50%
Land Securities Group (LAND) 1,100.00p 2.42%
Persimmon (PSN) 1,650.00p 2.42%
Lloyds Banking Group (LLOY) 56.77p 2.42%

FTSE 100 - Fallers

Anglo American (AAL) 777.70p -4.41%
Fresnillo (FRES) 1,823.00p -2.88%
Randgold Resources Ltd. (RRS) 8,710.00p -2.57%
BHP Billiton (BLT) 926.40p -2.33%
Glencore (GLEN) 176.35p -1.97%
Antofagasta (ANTO) 481.70p -1.73%
Rio Tinto (RIO) 2,339.00p -1.60%
Tesco (TSCO) 161.15p -1.59%
Next (NXT) 5,040.00p -0.98%
BT Group (BT.A) 389.40p -0.80%

FTSE 250 - Risers

Electrocomponents (ECM) 283.10p 9.56%
Ibstock (IBST) 143.70p 6.76%
DFS Furniture (DFS) 222.00p 5.51%
Hill & Smith Holdings (HILS) 1,041.00p 5.47%
Workspace Group (WKP) 711.00p 4.64%
JD Sports Fashion (JD.) 1,228.00p 4.16%
Card Factory (CARD) 314.00p 4.15%
NCC Group (NCC) 333.00p 4.03%
Cranswick (CWK) 2,361.00p 3.69%
OneSavings Bank (OSB) 216.60p 3.64%

FTSE 250 - Fallers

Polymetal International (POLY) 1,045.00p -5.77%
Thomas Cook Group (TCG) 61.45p -3.98%
Hochschild Mining (HOC) 213.80p -3.74%
Ashmore Group (ASHM) 342.10p -3.36%
TalkTalk Telecom Group (TALK) 215.70p -3.14%
Vedanta Resources (VED) 501.00p -3.00%
Virgin Money Holdings (UK) (VM.) 231.40p -2.53%
SIG (SHI) 104.80p -2.51%
Redefine International (RDI) 42.98p -2.32%
Circassia Pharmaceuticals (CIR) 97.90p -2.10%