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London open: Stocks mixed on weaker UK wage growth
London markets opened in mixed territory on Tuesday, as investors digested data showing continued weakness in the UK jobs market, after an upbeat session on Wall Street overnight.
As of 0822 BST, the FTSE 100 was down 0.12% at 8,282.39 points, while the FTSE 250 gained 0.26% to 20,871.08.
“The S&P 500 reached a new all-time high close, and the Dow Jones index surpassed 43,000 points for the first time, driven by a strong performance in semiconductor stocks, particularly a 2.4% jump in Nvidia, a prominent artificial intelligence company, as well as a positive start to the third-quarter earnings season,” said TickMill’s Patrick Munnelly.
“Asian equities broadly advanced, with Japan’s Nikkei leading regional gains after prime minister Shigeru Ishiba reportedly stated his government aims to draft a supplementary budget for the current fiscal year exceeding the previous year’s JPY 13.1trn to fund an economic support package.
“European equities are expected to start the trading session on a positive note on Tuesday, driven by investor confidence in corporate financial results.”
Munnelly added that attention was now turning to the financial results of Bank of America, Citigroup, Goldman Sachs, Johnson & Johnson, UnitedHealth, and Walgreens, following positive earnings reports from JPMorgan and Wells Fargo.
“The key focus for the European session will be the European Central Bank’s survey on bank lending to the eurozone economy, which is expected to influence expectations ahead of Thursday’s policy review.
“The ECB is widely anticipated to implement another 0.25% interest rate cut on Thursday, a move that policymakers were hesitant to signal and that traders had assigned less than a 25% probability to when the bank last met a month ago.”
Earnings growth slows to weakest level in over two years
In economic news, UK earnings growth slowed to its weakest level in over two years, highlighting a softening job market as businesses scaled back on payrolls.
Data from the Office for National Statistics (ONS) showed that average regular earnings increased by 4.9% in the three months to August, down from 5.1% in the previous quarter.
It marked the slowest wage growth since June 2022, raising market expectations for a potential rate cut from the Bank of England next month.
The report also showed a decline in job vacancies, with the number of open positions falling by 34,000 to 841,000 in the quarter to September.
Payrolls saw a drop of 35,000 between July and August, further evidence of a cooling labour market.
However, the unemployment rate unexpectedly decreased to 4% in the three months to August, from 4.1% previously, though the ONS cautioned that the figure may not be fully reliable due to a low survey response.
The ONS noted that pay growth continued to outpace inflation, though the effect of last year’s one-off public sector payments is still influencing the total pay figures.
“The further fall in wage growth in August, together with some signs that the labour market continued to loosen gradually, adds further support to widespread expectations that the Bank of England will cut interest rates from 5.00% to 4.75% at the next policy meeting in November,” said Ashley Webb, UK economist at Capital Economics.
Bellway rises on growing order book, QinetiQ in the red
On London’s equity markets, housebuilder Bellway saw its shares rise despite reporting a sharp drop in annual profits.
The company posted a 62% decline in pre-tax profit for the year ending July 31, to £183.7m, due to weaker demand amid higher mortgage rates.
Completions fell by a third to 7,654 homes.
However, Bellway’s forward order book grew to 5,109 homes by the end of September, up from 4,636 a year earlier, with a value of £1.43bn, signalling improving conditions ahead.
Fintech platform Wise also saw gains after reporting a 17% increase in second-quarter income, driven by a surge in customer numbers.
The company reported underlying income of £337m for the quarter, with first-half growth reaching 19%.
Active customers rose by 23% to 8.9 million, as Wise benefited from strong recommendations.
Cross-border volume increased by 20% to £35.2bn, with significant growth in customer deposits and revenue from card and other services.
On the downside, QinetiQ Group shares slipped after a trading update in which the defence technology firm said it was on track to meet full-year expectations.
The company forecast high single-digit organic revenue growth and stable margins, with cash conversion around 80%.
It also confirmed progress in its £100m share buyback programme, having repurchased £62m in shares by the end of the quarter, but this did little to buoy investor sentiment.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Wise Plc | +4.50% | +30.50 | 709.00 |
| 2 |  |
International Consolidated Airlines Group S.a. | +3.40% | +6.75 | 205.50 |
| 3 |  |
Taylor Wimpey Plc | +2.20% | +3.45 | 160.20 |
| 4 |  |
Wheaton Precious Metals Corp. | +2.17% | +100.00 | 4,700.00 |
| 5 |  |
Ck Infrastructure Holdings Limited | +2.10% | +11.10 | 540.00 |
| 6 |  |
Relx Plc | +1.89% | +68.00 | 3,672.00 |
| 7 |  |
Pershing Square Holdings Ltd | +1.66% | +60.00 | 3,666.00 |
| 8 |  |
Jd Sports Fashion Plc | +1.62% | +2.10 | 131.95 |
| 9 |  |
Auto Trader Group Plc | +1.55% | +13.60 | 890.60 |
| 10 |  |
Natwest Group Plc | +1.50% | +5.30 | 358.30 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Woodside Energy Group Ltd | -4.53% | -60.00 | 1,264.00 |
| 2 |  |
Bp Plc | -4.33% | -17.70 | 390.70 |
| 3 |  |
Anglo American Plc | -3.58% | -82.50 | 2,221.00 |
| 4 |  |
Glencore Plc | -3.47% | -14.60 | 405.95 |
| 5 |  |
Shell Plc | -2.95% | -76.50 | 2,513.00 |
| 6 |  |
Antofagasta Plc | -2.52% | -47.50 | 1,834.00 |
| 7 |  |
Centrica Plc | -2.33% | -2.90 | 121.50 |
| 8 |  |
Rio Tinto Plc | -2.08% | -107.00 | 5,027.00 |
| 9 |  |
South32 Limited | -1.97% | -3.80 | 189.40 |
| 10 |  |
Prudential Plc | -1.93% | -13.20 | 669.40 |
US close: Dow closes above 43,000 points for the first time
Major indices closed higher on Monday as market participants braced for a week packed with key Q3 corporate earnings.
At the close, the Dow Jones Industrial Average was up 0.47% at 43,065.925, while the S&P 500 advanced 0.77% to 5,859.85 and the Nasdaq Composite saw out the session 0.87% stronger at 18,502.69.
The Dow closed 201.36 points lower on Monday, the blue chip’s first time closing above the 43,000-point watermark, while the S&P 500 also closed at a fresh record.
This week’s primary focus will be earnings from a number of the nation’s biggest names in business, including Bank of America, Goldman Sachs, Johnson & Johnson, Morgan Stanley, United Airlines, Walgreens Boots Alliance, Netflix and Procter & Gamble.
Also due out later in the week, September retail sales and industrial production figures will be published on Thursday, followed by housing starts and building permits numbers on Friday.
Bond markets were closed on Monday in observance of Columbus Day.
Tuesday newspaper round-up: Energy crisis, Porterbrook, Google
Britain is at risk of experiencing a repeat of the sharp increase in energy costs which has fuelled the continuing cost of living crisis because it relies too heavily on gas, according to an expert panel of industry leaders. The Energy Crisis Commission has warned that the UK is still “dangerously underprepared” for another crisis because it continues to rely on gas for its power plants and home heating. – Guardian
The rolling stock firm Porterbrook paid out £80m in dividends to its mainly overseas shareholders last year, accounts show, fuelling further calls for Britain’s trains to be nationalised. The firm’s train leasing arm made profits of £144m in 2023, when the railway was still beset by strikes over frozen pay and passengers faced widespread cancellations and fare rises of almost 6%. – Guardian
Fears of a tax raid in the Budget are deterring investment in Britain, the boss of one of the UK’s biggest construction firms has warned. Expectations of a capital gains tax raid and Labour’s foot-dragging on planning decisions have left the construction industry reluctant to commit to new projects, according to Mark Reynolds, chief executive and chairman of Mace Group. Mr Reynolds, who is also co-chair of the Construction Leadership Council, an industry body, said: “What we are not doing is making growth investments. We are not deciding to proactively invest in our capital plant and equipment, or invest in taking on new jobs. – Telegraph
The owner of Vauxhall will decide the fate of its UK factories “within weeks” amid a row over net zero targets for electric vehicle (EV) sales. Stellantis, the brand’s parent company, warned in June that it would be forced to mothball plants in Ellesmere Port and Luton unless ministers relaxed rules forcing manufacturers to sell a certain proportion of EVs. The company, which also owns Fiat, Citroen and Peugeot, makes electric cars and vans at Ellesmere Port and vans in Luton, employing more than 1,000 workers across both sites. – Telegraph
Google has become the latest artificial intelligence-focused company to strike a nuclear energy deal to meet rising power demand from data centres. The technology giant said it has signed the world’s first corporate agreement to buy energy from multiple small modular reactors, in a move it believes could help spur a nuclear revival in America. – The Times
