London close: Stocks fall on EU inflation, US jobs data

The FTSE 100 index dropped 0.56% to finish at 8,121.20 points, while the FTSE 250 declined 0.14%, closing at 20,194.47 points.

In currency markets, sterling was last up 0.21% on the dollar, trading at $1.2676, while it climbed 0.24% against the euro to change hands at €1.1806.

“Despite the euro area inflation rate slowing to 2.5% year-on-year and the eurozone jobless rate holding steady at a record low of 6.4%, European stock indices continue to fall,” said IG senior market analyst Axel Rudolph.

“A slightly higher-than-expected year-on-year core inflation reading of 2.9% and concerns regarding the second round of the French legislative elections on Sunday might be to blame.

“US indices regained earlier losses as job openings topped expectations and US Treasury yields slid on Fed chair Jerome Powell comments which reinforced bets of 2024 rate cuts.”

Rudolph added that ongoing carry trades amid large interest rate differentials pushed the yen to fresh 38-year lows versus the dollar, as some traders expected the Bank of Japan not to intervene before USD-JPY reached the JPY 165 November 1986 high.

“EUR-JPY and GBP-JPY also continue to appreciate.

“The oil price cautiously adds to recent gains while gold and silver prices are mixed.”

European inflation slows marginally, US job openings rise

In economic news, inflation in the eurozone slowed marginally in June, according to preliminary estimates from Eurostat.

The harmonised index of consumer prices rose by 2.5% year-on-year, down from 2.6% in May, aligning with market expectations.

Core inflation, which excludes food, energy, alcohol, and tobacco, remained unchanged at 2.9%, contrary to forecasts predicting a slight drop to 2.8%.

Service sector inflation held steady at 4.1%, while non-energy industrial goods inflation was unchanged at 0.7%.

Energy prices grew by 0.2%, a slight decrease from 0.3% in May, and inflation for food, alcohol, and tobacco dipped to 2.5% from 2.6%.

Among eurozone countries, Belgium experienced the highest inflation rate at 5.5%, up from 4.9% in May.

Spain's inflation rate decreased to 3.5% from 3.8%, while Croatia and the Netherlands both recorded a rate of 3.4%, with Croatia's inflation falling from 4.3% and the Netherlands' rising from 2.7%.

Eurostat also reported that the eurozone's unemployment rate remained steady at 6.4% in May, consistent with economists' predictions and maintaining the region's record low.

Across the Atlantic, job openings rose modestly in the US in May, with more Americans feeling confident enough to leave their jobs in search of new opportunities.

According to the Department of Labor, job postings increased by 2.8% month-on-month to 8.14 million, surpassing expectations of a decline to 7.91 million from the revised April figure of 7.919 million.

Hiring rose by 2.5% to 5.77 million, while the number of separations, including voluntary quits, increased by 1.6% to 5.422 million.

The quits rate remained steady at 2.2% for the seventh consecutive month, slightly below the 2019 average.

“That rate is a touch below pre-pandemic levels and is consistent with ongoing moderation in wage growth but isn't sending any signals about significant weakness in the labour market," said Nancy Vanden Houten, lead US economist at Oxford Economics.

Sainsbury’s in the red, REITs in focus

On London’s equity markets, J Sainsbury dropped 2.87% after reporting a slowdown in first-quarter like-for-like sales growth.

The supermarket giant cited declines in general merchandise and its Argos division as contributing factors.

Total retail sales, excluding fuel, increased by 2.6% year-on-year in the 16 weeks to 22 June, with like-for-like sales rising by 2.7%, a sharp decline from the previous quarters' growth rates.

GSK fell 1.67% following a Delaware judge's decision to allow over 70,000 lawsuits related to the heartburn drug Zantac to proceed, rejecting GSK's appeal to dismiss the cases.

Beazley was down 5.24%, along with Hiscox, down 2.29%, and Lancashire Holdings, which lost 3.83%, amid concerns over the potential impact of Hurricane Beryl on insurers.

United Utilities declined 2.04% after losing a Supreme Court appeal, allowing Manchester Ship Canal to sue over untreated sewage discharges.

Sector peers Severn Trent and Pennon Group also saw declines of 1.8% and 2.84%, respectively.

On the upside, National Grid gained 0.86% after JPMorgan Cazenove added the stock to its ‘analyst focus list’, citing the company’s strong position for growth and a resolved balance sheet.

3i Group rose 2.28% following a price target increase by Citi to 3,800p, implying a 25% upside.

Citi highlighted the value of 3i Group’s stake in Action, a pan-European discount retailer, and projected significant sales growth and dividend returns from Action.

Tritax EuroBox jumped 3.44% after extending a deadline for a takeover offer from Brookfield Asset Management and receiving interest from other parties.

Other REITs also saw gains, including Tritax Big Box REIT, up 0.64%; Renewables Infrastructure Group, ahead 0.11%; and 3i Infrastructure, which was 0.93% firmer.

Outside the FTSE 350, Shoe Zone plummeted 11.54% after issuing a profit warning due to rising shipping costs and adverse weather conditions.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,121.20 -0.56%
FTSE 250 (MCX) 20,194.47 -0.14%
techMARK (TASX) 4,681.57 -0.39%

FTSE 100 - Risers

Flutter Entertainment (DI) (FLTR) 14,950.00p 2.05%
3i Group (III) 3,045.00p 1.98%
Croda International (CRDA) 3,959.00p 1.54%
BP (BP.) 484.70p 1.30%
Persimmon (PSN) 1,389.50p 1.28%
Glencore (GLEN) 466.25p 0.99%
National Grid (NG.) 893.00p 0.86%
Auto Trader Group (AUTO) 802.80p 0.75%
Darktrace (DARK) 580.80p 0.69%
Smith (DS) (SMDS) 422.00p 0.67%

FTSE 100 - Fallers

Beazley (BEZ) 650.50p -5.24%
BT Group (BT.A) 137.15p -2.94%
Sainsbury (J) (SBRY) 250.40p -2.87%
United Utilities Group (UU.) 958.80p -2.84%
Standard Chartered (STAN) 714.80p -2.68%
CRH (CDI) (CRH) 5,630.00p -2.43%
Fresnillo (FRES) 551.50p -1.96%
Vodafone Group (VOD) 68.96p -1.82%
Severn Trent (SVT) 2,351.00p -1.80%
AstraZeneca (AZN) 12,086.00p -1.77%

FTSE 250 - Risers

Ibstock (IBST) 162.80p 5.30%
Tritax Eurobox (GBP) (EBOX) 66.00p 4.43%
RS Group (RS1) 713.50p 3.86%
Foresight Group Holdings Limited NPV (FSG) 494.00p 3.35%
Ocado Group (OCDO) 297.30p 3.19%
Ascential (ASCL) 355.55p 3.06%
AO World (AO.) 115.60p 2.66%
Bridgepoint Group (Reg S) (BPT) 220.40p 2.61%
Marshalls (MSLH) 295.50p 2.43%
Mony Group (MONY) 227.60p 2.25%

FTSE 250 - Fallers

Auction Technology Group (ATG) 457.50p -3.99%
Wizz Air Holdings (WIZZ) 2,066.00p -3.91%
Morgan Advanced Materials (MGAM) 300.00p -3.85%
Lancashire Holdings Limited (LRE) 578.00p -3.83%
Pennon Group (PNN) 563.50p -3.59%
Hochschild Mining (HOC) 173.40p -3.56%
Quilter (QLT) 113.90p -3.56%
CMC Markets (CMCX) 328.50p -2.65%
Elementis (ELM) 143.00p -2.59%
Dr. Martens (DOCS) 72.35p -2.50%