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London open: Frasers Group paces gains as investors mull jobs data
London stocks rose in early trade on Thursday as investors mulled the latest UK jobs data, with Frasers Group pacing the advance after well-received results.
At 0840 BST, the FTSE 100 was up 0.9% at 8,262.09.
Data released earlier by the Office for National Statistics showed that wages grew at their slowest pace in nearly two years in the three months to May.
Annual pay excluding bonuses was up 5.7%, down from 6% growth in the previous three-month period. This was in line with economists’ expectations and marked the slowest pace of growth since September 2022.
Including bonuses, total earnings rose 5.7%, down from 5.9% and also as expected.
Meanwhile, the unemployment rate was steady at 4.4% in May, in line with expectations.
The data also showed that job vacancies fell from 905,000 in the three months to May to 889,000 in the three months to June, leaving them 32% below the peak in May 2022.
Liz McKeown, ONS director of economic statistics, said: “We continue to see overall some signs of a cooling in the labour market, with the growth in the number of employees on the payroll weakening over the medium term and unemployment gradually increasing.
“Earnings growth in cash terms, while remaining relatively strong, is showing signs of slowing again. However, with inflation falling, in real terms it is at its highest rate in over two and a half years.”
Ashley Webb, UK economist at Capital Economics, said: “While the easing in wage growth in May was broadly in line with what the consensus and the Bank of England expected, it probably doesn’t offset the overshoot in services inflation in recent months.
“As a result, we have changed our forecast for the timing of the first interest rate cut from 5.25% from August to September, although it is a close call.”
Looking ahead to the rest of the day, attention will turn to the latest policy announcement from the ECB at 1315 BST amid expectations it will stand pat on interest rates.
Patrick Munnelly at TickMill Group said: “Traders will closely watch for any comments from officials that may provide insight into future rate cuts. These comments are likely to influence the euro, which reached a four-month high on Wednesday as traders fully priced in a 25 basis-point rate cut by the Federal Reserve in September, following remarks from officials.”
In equity markets, Frasers Group surged to the top of the FTSE 100 as it posted annual profits at the top of guidance, despite a dip in revenues. Adjusted pre-tax profits were boosted by a lack of exceptional items compared to the previous year, and came in at £544.8, a 13% uplift and at the top end of guidance of between £500m and £550m.
Schroders followed close behind after an upgrade to ‘overweight’ by Morgan Stanley.
Private equity and infrastructure investment group 3i gained after saying it had an “encouraging start” to the new financial year, with net asset value (NAV) rising 4% over the first quarter.
Anglo American was also in the black as it held annual copper and iron ore production guidance after a second-quarter update.
Dunelm advanced as the homewares retailer said full-year pre-tax profit was set to be “slightly ahead” of current market expectations of £200m after a “strong” final quarter.
AJ Bell gained as the investment platform said assets under administration rose 20% on the year in the third quarter to £83.7bn.
Qinetiq trading higher as it said it was on track to meet FY25 expectations after a “good” first-quarter performance.
On the downside, Diploma fell as the distribution group held guidance as revenue grew 13% in the nine months to 30 June.
Premier Foods slumped even as it reported a jump in first-quarter sales, boosted by strong demand overseas for Mr Kipling cakes.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | +6.57% | +23.50 | 381.00 |
| 2 |  |
Schroders Plc | +4.94% | +18.60 | 395.40 |
| 3 |  |
Wpp Plc | +2.42% | +17.60 | 744.00 |
| 4 |  |
St. James’s Place Plc | +1.88% | +10.50 | 570.50 |
| 5 |  |
Sage Group Plc | +1.83% | +19.00 | 1,058.50 |
| 6 |  |
3i Group Plc | +1.76% | +54.00 | 3,122.00 |
| 7 |  |
Croda International Plc | +1.76% | +71.00 | 4,110.00 |
| 8 |  |
Itv Plc | +1.62% | +1.35 | 84.70 |
| 9 |  |
Lloyds Banking Group Plc | +1.60% | +0.94 | 59.72 |
| 10 |  |
Scottish Mortgage Investment Trust Plc | +1.57% | +13.60 | 878.20 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Flutter Entertainment Plc | -1.55% | -245.00 | 15,585.00 |
| 2 |  |
Intercontinental Hotels Group Plc | -1.45% | -122.00 | 8,270.00 |
| 3 |  |
Antofagasta Plc | -0.98% | -19.50 | 1,978.50 |
| 4 |  |
Easyjet Plc | -0.86% | -4.20 | 482.40 |
| 5 |  |
Ferguson Plc | -0.68% | -110.00 | 16,175.00 |
| 6 |  |
Carnival Plc | -0.61% | -8.00 | 1,305.50 |
| 7 |  |
Hiscox Ltd | -0.47% | -6.00 | 1,259.00 |
| 8 |  |
Auto Trader Group Plc | -0.47% | -3.80 | 810.40 |
| 9 |  |
Crh Plc | -0.23% | -14.00 | 6,202.00 |
| 10 |  |
Rightmove Plc | -0.03% | -0.20 | 579.00 |
US close: Dow hits another high, but tech stocks tank the Nasdaq
US stocks finished in mixed fashion on Wednesday with the Dow setting another record high but the S&P 500 and Nasdaq sinking sharply, with the latter experiencing its worst one-day sell-off in well over a year.
Concerns about government intervention in the semiconductor market tanked chip stocks, causing the Nasdaq to sink 2.77% to 17,996.92 – its first time below the 18,000 level in two weeks and the worst daily performance since December 2022.
“Investors have got used to non-stop good news from tech stocks, so the slightest bit of negativity has caught people off guard and caused panic on the markets,” said Dan Coatsworth, investment analyst at AJ Bell.
“A lot of people have got rich thanks to the AI narrative fuelling a mega rally in tech stocks, but today’s correction is an important reminder that the sector is far from risk-free.”
Weakness in the tech sector was also weighing on the S&P 500, which fell 1.39% to 5,588.27 as it pulled back after setting its 38th record close of the year the previous session. The Dow, however, gained another 0.59% to finish at another all-time closing high of 41,198.08 – its third record in a row.
Economic data in focus
On the macro front, US mortgage applications surged 3.9% week-on-week, according to the Mortgage Bankers Association of America, erasing the prior two week’s declines and marking the sharpest increase in a month. Applications to refinance a mortgage soared 15%, offsetting a 3% drop in applications to purchase a home.
US homebuilding activity picked up in June, according to the Department of Commerce, rising 3.0% to reach an annual rate of 1.35m. In parallel, the number of permits issued for new home construction jumped by 3.4% over the month to reach 1.446m but those for single-family homes dropped by 2.3%.
Finally, industrial production jumped in June, led by a surge in output from utilities. According to the Department of Commerce, in seasonally adjusted terms industrial output was up 0.6% over the month, beating the 0.3% consensus estimate. The degree of capacity in use increased by five-tenths of a percentage point in comparison to the month before to reach 78.8%
Chip stocks sink
Advanced Micro Devices, Nvidia, Lam Research, ASML, Broadcom and Qualcomm all suffered heavy losses on Wednesday on the back of concerns that heightened trade tensions between the US and China might hit operations.
Market chatter suggested that both Joe Biden and Donald Trump are considering tighter controls on cross-border relationships in the semiconductor manufacturing sector as part of their election campaigns. Trump in particular suggested that Taiwan should pay the US for its protection from China, risking damaging relations between the two countries.
“That could be problematic given that TSMC (Taiwan Semiconductor Manufacturing Company) is a major partner to both ASML and stock market darling, Nvidia,” said AJ Bell’s Coatsworth.
Johnson & Johnson’s stock was in the green after the pharmaceutical giant reported second-quarter earnings and sales that surpassed analysts’ expectations, largely driven by its innovative medicines segment.
GitLab surged 9% following a report it is exploring a sale after attracting acquisition interest. Reuters cited people familiar with the matter as saying that the US provider of cloud-based software development tools is working with investment bankers on a sale process that has attracted interest from peers, including cloud monitoring firm Datadog.
Also rising strongly was VF Corp on the news it is selling its streetwear brand Supreme to EssilorLuxottica for $1.5bn. The company had said recently that Supreme’s business model – focused on frequent, weekly and limited product drops – presented “unique risks”. Investors gave their sign of approval of the sale, with shares rising nearly 14%.
Thursday newspaper round-up: Aslef, unemployment, Microsoft
The co-founders of Silicon Valley’s most prominent venture capital firm have announced their support for Donald Trump’s bid for re-election, and plan to make substantial donations to back him further. Ben Horowitz and Marc Andreessen, the heads of Andreessen Horowitz, commonly known as A16Z, revealed their plans in a sprawling 90-minute podcast, in which they argued that the future of “American innovation” required a Trump victory. – Guardian
Talks between the train drivers’ union Aslef and the Department for Transport (DfT) will take place next week as the new Labour government seeks a swift resolution to the long-running national pay dispute. Aslef’s general secretary, Mick Whelan, said he believed fresh talks “can and will get a deal”, more than two years on from the start of a series of strikes by drivers that have halted train services around the country. – Guardian
More than 250,000 young people risk missing out on jobs if an overhaul of the minimum wage by Angela Rayner backfires, experts have warned. A radical change to workers rights championed by the Deputy Prime Minister and set out in the King’s Speech includes plans to remove “discriminatory age bands” that mean a lower wage is paid to younger people. – Telegraph
London-listed companies are back in favour with investors ahead of their European rivals, according to one of the world’s biggest fund managers. The latest edition of Bank of America’s European fund manager survey included the views of 242 fund managers with a combined $632 billion of assets under management. It was carried out between July 5 and 11. – The Times
Microsoft has concluded diversity is “no longer business critical” and has laid off staff working on inclusion initiatives, a former employee has claimed. The technology company has disbanded a team working on diversity, equity and inclusion (DEI) policies because of “changing business needs”, according to the former Microsoft team leader. – The Times
