People at the job centre
UK’s unemployment rate in three months to January increased to 3.9% / Image source: Adobe

Stock prices in London opened largely higher on Tuesday morning, with TP ICAP topping the FTSE 250 as it mulls a minority float of its Parameta Solutions arm, while pet care firms struggled amid UK watchdog scrutiny.

The FTSE 100 index rose 59.85 points, 0.8%, to 7,729.08. The FTSE 250 climbed 34.28 points, 0.2%, at 19,564.37, though the AIM All-Share fell 2.09 points, 0.3%, at 736.19.

The Cboe UK 100 was up 0.8% at 773.79, the Cboe UK 250 added 0.1% at 16,931.35, and the Cboe Small Companies was flat at 14,751.57.

In European equities on Monday, the CAC 40 in Paris was up 0.1% while the DAX 40 in Frankfurt added 0.2%.

The pound was quoted at $1.2779 early Tuesday, falling from $1.2801 at the London equities close on Monday. The euro was unmoved at $1.0923. Against the yen, the dollar climbed to JP¥147.35 from JP¥146.89.

The UK unemployment rate unexpectedly picked up in the three months to January, while the pace of wage growth eased, numbers on Tuesday showed.

According to the Office for National Statistics, the nation’s unemployment rate in three months to January increased to 3.9%, from 3.8% in the three months to December.

The jobless rate was expected to remain at 3.8% for the period, according to FXStreet cited consensus.

The ONS said average earnings excluding bonuses rose 6.1% on-year in the period, the pace of growth easing from 6.2% in the three months to December, where it had been expected to remain. Including bonuses, growth eased to 5.6% from 5.8%. According to FXStreet, only a slowdown to 5.7% was expected.

‘At the margin, the latest UK jobs report is slightly dovish for the Bank of England. The unemployment rate edged higher to 3.9%, with the usual caveat that there are still reliability question marks surrounding these numbers. Unfilled job vacancy numbers are falling steadily and are closing in on pre-Covid levels,’ ING analysts commented.

‘More importantly for the BoE, annual private sector wage growth dipped from 6.2% to 6.0%, and is now some way below last year’s peak of 8.1%.’

ING analysts continued: ‘Given that we saw some very chunky month-on-month pay rises through the first and second quarter of last year, we’d expect this annual rate of wage growth in the private sector to slow to the 4-4.5% area by early summer.’

Still to come on Tuesday is a US inflation reading at 1230 GMT. According to FXStreet cited consensus, the US annual consumer price inflation rate is expected to have remained at 3.1% in February.

Lloyds Banking Group analysts said there are some ‘upside risks’ to the reading.

‘US Federal Reserve Chair Powell pointed to the likelihood of a US interest rate cut by mid-year unless the inflation outlook deteriorates, and today’s outturns will probably not put that move in jeopardy. But they may reinforce Fed policymakers caution about making further cuts,’ the analysts added.

Already out, numbers confirmed the German consumer price inflation rate cooled to 2.5% in February, from 2.9% in January. That is the lowest level of inflation since June 2021, when it stood at 2.4%.

The figure was in line with a flash estimate.

The harmonised index of consumer price index for Germany, which allows for EU-wide comparison, slowed to a 2.7% annual rise in February from 3.1% in January, also in line with the earlier flash.

In London, TP ICAP shares surged 10%, the best FTSE 250 performer. The interdealer broker reported an annual revenue rise, said it will launch a new share buyback programme and added that it is mulling a minority float of its Parameta Solutions arm.

Chief Executive Nicolas Breteau said on the market data solutions unit: ‘The board believes that Parameta’s significant growth prospects, and the intrinsic value of the business, are not appropriately reflected in our share price. We are therefore exploring options for unlocking value for shareholders, whilst retaining ownership of the asset, which include a potential IPO of a minority stake in the business.’

TP ICAP said revenue in 2023 expanded 3.6% to £2.19 billion, from £2.12 billion in 2022. Pretax profit, however, fell 15% to £96 million from £113 million. On an adjusted basis, it rose 20% to £271 million from £226 million. The adjusted figure strips out ‘significant items’ such as amortisation and impairment costs.

TP ICAP lifted its final dividend by 27% to 10.0p, and upped its total annual dividend by 19% to 14.8p.

It also announced the launch of a £30 million share buyback programme, after completing one of the same size in January.

Pets At Home fell 4.9%, while peer CVS Group plunged 21%. This was in response to the UK Competition & Markets Authority finding ‘multiple concerns’ in the pet care market.

The watchdog said it has provisionally come to the conclusion that it should launch a ‘formal market investigation’.

One of its concerns is sector consolidation.

‘Since 2013 1,500 of the 5,000 vet practices in the UK have been acquired by the six large corporate groups,’ the CMA said, with Pets at Home and CVS among the six firms named.

CVS said in response: ‘CVS has engaged constructively and proactively with the CMA throughout its review. As the announcement today cites, CVS along with certain other corporate groups who together own around 50% of first opinion practices in the UK, has already engaged constructively with the CMA and put forward a package of possible remedies to address its concerns. CVS continues to believe this package could be adopted across the market and could address the CMA’s concerns more quickly than an 18-month investigation.’

Regional REIT plunged 36% as it confirmed it is mulling ‘a range of refinancing options’ in respect to an existing £50 million retail bond which matures in August. Options include a debt or equity raise.

The commercial property investor said, in a statement ahead of the equities open, that any equity issue would likely be ‘at a material discount’ to its share price. Regional REIT shares had closed at 20.15p on Monday.

Brent oil was quoted at $82.65 a barrel early Tuesday in London, up from $82.36 at the time of the last European equities close. Gold was quoted at $2,176.76 an ounce, down from $2,184.09.

In New York, the Dow Jones Industrial Average rose 0.1% on Monday, though the S&P 500 and Nasdaq Composite fell 0.1% and 0.4%, respectively.

In Tokyo, the Nikkei 225 closed down 0.1%. The Shanghai Composite ended 0.4% lower, though the Hang Seng shot up 3.1%. The S&P/ASX 200 in Sydney added 0.1%.

On the rise in Asian dealings was Xiaomi, which jumped 11%. It said it will start deliveries of its first electric vehicle by the end of March.

Up to now, Xiaomi’s offering has consisted of items such as smartphones, tablets, headphones and scooters. In 2021, the Beijing-based firm announced its planned foray into the electric vehicle sector.

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Issue Date: 12 Mar 2024