A mixed UK jobs report left the London stock market similarly mixed early Tuesday, as investors awaited the day’s main event - a US inflation reading coming a day before the next Fed rate decision.
The FTSE 100 index opened up 6.31 points, or 0.1%, at 7,452.28. The FTSE 250 was up 9.91 points, or 0.1%, at 18,829.35. Meanwhile, the AIM All-Share was down 1.30 points, or 0.2%, at 829.18.
The Cboe UK 100 was up 0.1% at 745.63, the Cboe UK 250 was down 0.2% at 16,241.56, and the Cboe Small Companies was up 0.1% at 13,048.17.
The UK unemployment rate rose in the three months to October, figures from the Office of National Statistics showed. Between August to October 2022, the UK unemployment rate was 3.7%, up from 3.6% in the previous period of May to July.
The average rate of annual pay growth from August to October for both total and regular pay was the same at 6.1%. This compared to growth in average total pay of 6.0%, and growth in regular pay of 5.7%, from July to September. UK consumer price inflation was 11.1% in October.
Analysts suggested that wage growth, though still falling well short of inflation, sill will be a concern for the Bank of England, ensuring its foot remains on the monetary policy brake in the short term.
‘So far it does not look as if a wage price spiral is emerging,’ commented James Richard Sproule, chief UK economist at Handelsbanken. ‘This data reinforces our view that the Bank of England’s Monetary Policy Committee will be raising interest rates by 50 basis points to 3.5% on Thursday.’
The pound was quoted at $1.2259 at early on Tuesday in London, lower compared to $1.2267 at the equities close on Monday.
The UK economy was under additional pressure due to widespread strike action this week. Hopes of a major breakthrough in the rail dispute were shattered after Network Rail workers rejected a pay offer. Members of the Rail, Maritime and Transport union will now press ahead with two 48-hour strikes at Network Rail - and 14 train companies - starting from Tuesday and Friday.
The RMT said 63.6% voted to reject Network Rail’s offer on an 83% turnout.
In London, Shell rose 1.3% after it announced the sale of two offshore production sharing contracts in the Baram Delta of Malaysia.
The base consideration of the sale is $475 million, with additional payments of up to $50 million between 2023 and 2024, contingent on commodity prices.
‘Malaysia remains one of our eight core Upstream positions worldwide and we will continue to help power the country‘??s progress by investing in the oil and gas needed today, as well as in the transition to a low-carbon energy system,’ Shell said.
Shell currently has 19 production sharing contracts in Malaysia.
Rolls-Royce dropped 3.6% as JPMorgan put the engine maker on ’negative catalyst watch’.
In the FTSE 250, Synthomer rose 4.0%. The chemicals firm agreed to sell its laminates, films and coated fabrics businesses to Surteco North America for an enterprise value of $255 million.
Synthomer expects the proceeds from the sale to total $245 million and added that they will be used to repay debt.
‘This divestment is consistent with our recently announced strategy to increase the specialty weighting of our portfolio and focus on higher value, higher growth markets where we have strong and sustainable leadership positions. The proceeds represent excellent value for our shareholders and the transaction is a significant step in the deleveraging of the group,’ said Chief Executive Michael Willome.
easyJet were down 0.5% to 377.85 pence, after Oddo BHF cut shares in the lost-cost airline to ’underperform’ form ’neutral’ with a price target of 300p.
Elsewhere on the London Stock Exchange, Keywords Studios fell 0.5% despite announcing it acquired Milan-based PR and communications agency LabCom for an initial cash consideration of €1.0 million, in addition to the issue of up to 12,412 shares, three years following the acquisition date.
Keywords explained that LabCom predominantly focuses on the video game sector in Italy. It will join the creative service provider’s marketing businesses in the Engage service line.
‘This transaction broadens our reach in PR and communications services, and supports our strategy of building out a complete marketing offering for our clients,’ Chief Executive Bertrand Bodson said.
In European equities on Tuesday, the CAC 40 in Paris was flat, while the DAX 40 in Frankfurt was up 0.1%.
Consumer price inflation in the EU’s largest economy remained in double-digits in November, data from Destatis confirmed.
The inflation rate in Germany, as measured by the year-on-year change in the consumer price index, stood at 10.0% in November, slowed from a 10.4% increase in October. On a monthly basis, consumer prices were down 0.5% in November from October.
Both the month-on-month and year-on-year prints were in-line with market consensus, as cited by FXStreet.
‘The inflation rate remains at a high level of 10.0% despite a slight slowdown in energy prices. We see price increases for more and more other goods, in addition to energy. What has become particularly notable for households is the continuing increase in food prices,’ said Georg Thiel, president of the Federal Statistical Office.
The euro stood at $1.0541 in early morning trade on Tuesday, marginally firm against $1.0538 late Monday. Against the yen, the dollar was trading at JP¥137.63, higher compared to JP¥137.54.
In Asia on Tuesday, the Japanese Nikkei 225 index closed up 0.4%. In China, the Shanghai Composite closed down 0.1%, while the Hang Seng index in Hong Kong closed up 0.7%. The S&P/ASX 200 in Sydney was up 0.3%.
Hong Kong announced it would no longer require residents to use a scanning app to enter venues and that overseas arrivals could now visit bars and restaurants from the moment they land in a further easing of Covid restrictions.
The move comes a day after authorities in mainland China said they were retiring an app used to track travel to areas with Covid-19 cases, a milestone in the country’s rapid turn away from its zero-tolerance coronavirus strategy.
Brent oil was quoted at $79.28 a barrel at early in London on Tuesday, up from $78.33 late Monday. Gold was quoted at $1,785.51 an ounce, higher against $1,782.67.
Still to come on Tuesday, there’s an inflation reading from the US at 1330 GMT.
