London midday: Stocks extend gains, sterling rallies as investors digest jobs data

The FTSE 100 was up 0.9% at 7,529.88, while the pound gained 1.2% against the dollar to 1.2465.

Figures released earlier by the Office for National Statistics showed the unemployment rate declined to a 48-year low in the first three months of the year, but wages were squeezed by surging inflation.

The unemployment rate fell from 3.8% in the previous quarter to 3.7% - its lowest level since 1974. 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.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "A spurt of growth in the UK labour market and a round of higher wages has pushed the pound higher in the expectation further rate hikes from the Bank of England are inevitable despite the weakening economy.

"Although consumer purchasing power is set to be eroded further by an apocalyptic rise in food prices, that is not likely to deter the Bank of England from the necessity of having to be tougher with its monetary policy given that wage growth is fast becoming another inflationary pressure. The fight for staff has led to higher bonuses across a raft of businesses from retailers to airlines with the three-month rate of annual earnings growth jumping from 5.6% in February to 7% in March. Wage growth is still lagging behind inflation by 1.2%, which is expected to dent consumer spending and help tip the UK into recession.

"But this spiralling up in earnings is still likely to keep policymakers at the Bank firmly on the path of rate hikes, however uncomfortable this journey will be for households who are being side swiped by the cost-of-living crisis."

In equity markets, Imperial Brands was the top performer on the FTSE 100 as it reported lower operating profit after accounting for its exit from Russia in response to the invasion of Ukraine, but said it was on track to meet full-year guidance.

Power generation firm ContourGlobal surged to the top of the FTSE 250 after it agreed to be bought by private equity group KKR for £1.75bn.

Sales, marketing and support services group DCC rallied as its full-year operating profit beat expectations.

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

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

Vodafone fell after the mobile telecoms group posted a 5% rise in annual profits as its German operations performed strongly, but warned that inflation was likely to hit current-year figures.

TI Fluid Systems slumped as it reported a decline in first-quarter revenues and volumes, pointing to supply chain disruptions.

Market Movers

FTSE 100 (UKX) 7,529.88 0.87%
FTSE 250 (MCX) 20,131.99 1.04%
techMARK (TASX) 4,341.64 0.31%

FTSE 100 - Risers

Imperial Brands (IMB) 1,847.50p 7.88%
Fresnillo (FRES) 792.40p 4.70%
Prudential (PRU) 1,007.00p 4.29%
Hargreaves Lansdown (HL.) 904.20p 3.57%
Intermediate Capital Group (ICP) 1,491.00p 3.36%
Smurfit Kappa Group (CDI) (SKG) 3,264.00p 3.32%
Anglo American (AAL) 3,456.50p 3.23%
Barclays (BARC) 156.58p 3.22%
Royal Mail (RMG) 345.60p 3.19%
Antofagasta (ANTO) 1,425.50p 3.11%

FTSE 100 - Fallers

Unilever (ULVR) 3,675.00p -1.54%
Rolls-Royce Holdings (RR.) 79.59p -1.35%
Reckitt Benckiser Group (RKT) 6,348.00p -1.21%
Ocado Group (OCDO) 805.00p -0.84%
Smith & Nephew (SN.) 1,285.00p -0.70%
Land Securities Group (LAND) 737.00p -0.67%
Tesco (TSCO) 284.80p -0.66%
Associated British Foods (ABF) 1,659.00p -0.57%
SEGRO (SGRO) 1,114.00p -0.45%
GlaxoSmithKline (GSK) 1,790.60p -0.43%

FTSE 250 - Risers

Contour Global (GLO) 256.00p 32.37%
C&C Group (CDI) (CCR) 218.00p 6.34%
Fidelity China Special Situations (FCSS) 242.00p 4.99%
Trustpilot Group (TRST) 116.40p 4.86%
Wizz Air Holdings (WIZZ) 3,075.00p 4.17%
Tullow Oil (TLW) 55.90p 4.10%
Centrica (CNA) 82.90p 3.86%
RIT Capital Partners (RCP) 2,475.00p 3.77%
Countryside Partnerships (CSP) 236.80p 3.68%
Watches of Switzerland Group (WOSG) 1,009.00p 3.59%

FTSE 250 - Fallers

TI Fluid Systems (TIFS) 159.40p -15.21%
Tritax Eurobox (GBP) (EBOX) 93.00p -4.22%
Baltic Classifieds Group (BCG) 144.20p -2.83%
Britvic (BVIC) 835.00p -2.22%
Convatec Group (CTEC) 217.00p -1.54%
Chrysalis Investments Limited NPV (CHRY) 135.80p -1.45%
Vivo Energy (VVO) 144.20p -1.37%
Grainger (GRI) 299.00p -1.12%
Rank Group (RNK) 99.00p -1.00%
LXI Reit (LXI) 144.00p -0.96%