London close: Stocks rise, sterling strengthens on jobs data

The FTSE 100 ended the session up 0.72% at 7,518.35, and the FTSE 250 was ahead 0.71% at 20,065.59.

Sterling was in the green against its major trading pairs, last jumping 1.29% on the dollar to $1.2478, and advancing 0.24% on the euro to change hands at €1.1838.

“Equity markets are enjoying a rally as a bullish mood is dominant on both sides of the Atlantic,” said Equiti Capital analyst David Madden.

“Dealers are content to buy equities even though the same old uncertainties about high inflation, the war in Ukraine, and the prospect of further rate hikes persist.”

Madden said it remained to be seen whether the gains in stocks were a relief rally, or the beginning of a wider turnaround.

“Given that those problems are yet to be resolved, a sustained rally might be hard to maintain.”

On the economic front, the UK unemployment rate declined to a 48-year low in the first three months of the year, but the data from the Office for National Statistics showed wages were being squeezed by surging inflation.

The unemployment rate fell from 3.8% in the previous quarter to 3.7% - its lowest level since 1974 - while analysts had been expecting it to hold steady at 3.8%.

At the same time, total earnings growth rose to 7% in March from 5.6% in February, but regular earnings growth excluding bonuses only ticked up to 4.2% from 4.1%.

Adjusted for prices, average earnings excluding bonuses fell by 1.9% from a year earlier, marking the biggest drop since 2013.

The figures also showed that the number of vacancies in February to April rose to a new record of 1,295,000, up 33,700 on the previous quarter and 499,300 compared to pre-pandemic levels in January to March 2020.

“While the economy was still growing in the first three months of 2022, there continued to be a mixed picture for the labour market,” said ONS statistician Darren Morgan.

“Total employment, while up on the quarter, remains below its pre-pandemic level.

“Since the start of the pandemic, around half a million more people have completely disengaged from the labour market.”

Morgan said job vacancies were, however, still rising, reaching another record high.

“Indeed, with the latest fall in unemployment, to its lowest rate since 1974, there were actually fewer unemployed people than job vacancies for the first time since records began.

“Continued strong bonuses in some sectors such as construction and especially finance mean that total pay is continuing to grow faster than prices on average, but underlying regular earnings are now falling sharply in real terms.”

Across the channel, official data showed the eurozone economy strengthening in the first quarter, despite the impact of the war in Ukraine.

According to flash estimates from Eurostat, GDP rose by 0.3% quarter-on-quarter in the first three months of the year, and by 0.4% across the wider bloc.

That compared to growth of 0.3% and 0.5% for the eurozone and the EU respectively in the fourth quarter.

Stateside, Americans continued splashing out much more than expected last month, especially on automobiles, with the US Department of Commerce reporting that retail sales volumes jumped at a month-on-month pace of 0.9% in April to reach $677.71bn.

Excluding spending on automobiles, retail sales rose by 0.6% on the month, and if gasoline stations were also excluded, then by 1.3%.

"’Never bet against the US consumer’ has always been a good adage to bear in mind throughout my 20-plus years in the markets,” said Paul Ashworth, chief US economist at Capital Economics.

“Despite the surge in prices weighing on their purchasing power, the US consumer now appears to be single-handedly keeping the global economy afloat.”

Back on London’s equity markets, Imperial Brands jumped 7.88% by the close after it reported a fall in operating profit after accounting for its exit from Russia in response to the invasion of Ukraine.

The cigarette giant did, however, say it was on track to meet full-year guidance.

Power generation firm ContourGlobal rocketed 32.89% after it agreed to be bought by private equity group KKR for £1.75bn.

Drinks group C&C - which owns the Bulmers and Magners cider brands, among others - fizzed 3.71% higher after it swung to a full-year profit as Covid restrictions eased.

Vodafone Group managed gains of 0.2%, clawing back earlier losses after it posted a 5% rise in annual profits as its German operations performed strongly, but warned that inflation was likely to hit current-year figures.

Wizz Air ascended 4.74% after the central Europe-focussed budget airline announced plans to set up a Maltese subsidiary.

On the downside, Unilever was knocked 1.78% lower by a double downgrade to ‘sell’ at Societe Generale.

TI Fluid Systems tumbled 14.89% after it reported a decline in first-quarter revenues and volumes, pointing to supply chain disruptions.

Sales, marketing and support services group DCC reversed earlier gains to close down 1.98%, despite beating expectations for full-year operating profit.

High street stalwart Next was on the back foot by 1.81%, after Credit Suisse slashed its price target on the shares to 6,450p from 8,025p and argued that the stock was higher risk than it looked.

Following the retailer’s first-quarter results, the bank cut its full-year sales growth estimate to 6.5% from 7%, and its pre-tax profit estimate to £830m from £866m, versus guidance of £830m.

It said that given better weather in March and April, Next’s first quarter sales were "marginally disappointing".

Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk, Abigail Townsend and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,518.35 0.72%
FTSE 250 (MCX) 20,065.59 0.71%
techMARK (TASX) 4,340.32 0.28%

FTSE 100 - Risers

Imperial Brands (IMB) 1,847.50p 7.88%
Prudential (PRU) 1,016.50p 5.27%
Antofagasta (ANTO) 1,446.00p 4.59%
Anglo American (AAL) 3,498.50p 4.48%
Glencore (GLEN) 498.25p 4.45%
Hargreaves Lansdown (HL.) 902.60p 3.39%
ITV (ITV) 72.80p 2.94%
Fresnillo (FRES) 778.40p 2.85%
Aviva (AV.) 406.90p 2.79%
Barclays (BARC) 155.86p 2.74%

FTSE 100 - Fallers

Tesco (TSCO) 278.30p -2.93%
Compass Group (CPG) 1,772.50p -2.40%
Reckitt Benckiser Group (RKT) 6,290.00p -2.12%
DCC (CDI) (DCC) 6,130.00p -1.98%
Sainsbury (J) (SBRY) 240.10p -1.84%
Next (NXT) 6,428.00p -1.81%
Unilever (ULVR) 3,666.00p -1.78%
Sage Group (SGE) 666.40p -1.68%
Ocado Group (OCDO) 800.20p -1.43%
Diageo (DGE) 3,836.00p -0.80%

FTSE 250 - Risers

Contour Global (GLO) 257.00p 32.89%
Centrica (CNA) 84.54p 5.91%
Wizz Air Holdings (WIZZ) 3,055.00p 4.74%
Petershill Partners (PHLL) 232.00p 4.73%
Dr. Martens (DOCS) 208.00p 4.58%
Ferrexpo (FXPO) 156.60p 3.73%
C&C Group (CDI) (CCR) 212.60p 3.71%
Fidelity China Special Situations (FCSS) 238.50p 3.69%
Euromoney Institutional Investor (ERM) 1,030.00p 3.62%
Bridgepoint Group (Reg S) (BPT) 284.00p 3.43%

FTSE 250 - Fallers

TI Fluid Systems (TIFS) 160.00p -14.89%
Baltic Classifieds Group (BCG) 138.40p -6.74%
Chrysalis Investments Limited NPV (CHRY) 130.20p -5.52%
Tritax Eurobox (GBP) (EBOX) 93.50p -3.71%
Mediclinic International (MDC) 352.20p -2.28%
Biffa (BIFF) 309.60p -2.03%
4Imprint Group (FOUR) 2,930.00p -2.01%
JPMorgan Japanese Inv Trust (JFJ) 453.00p -1.95%
Petrofac Ltd. (PFC) 153.90p -1.85%
International Public Partnerships Ltd. (INPP) 165.40p -1.78%