UK flag with stock prices
The FTSE was outperforming European peers at midday after UK employment data raised hopes of a rate cut / Image source: Adobe

The FTSE 100 was outperforming its European peers at midday Tuesday, after market sentiment got a boost from UK employment data, which has raised the chances of a Bank of England interest rate cut.

A red-hot US consumer price rise could undo all of that progress, however. According to FXStreet cited consensus, the US annual consumer price inflation rate is expected to have remained at 3.1% in February.

The data is released at 1230 GMT.

The FTSE 100 index surged 86.57 points, 1.1%, to 7,755.80. The FTSE 250 climbed 60.85 points, 0.3%, at 19,590.94, though the AIM All-Share fell 0.42 of a point, 0.1%, at 737.85.

The Cboe UK 100 was up 1.2% at 776.77, the Cboe UK 250 added 0.3% at 16,976.06, and the Cboe Small Companies rose 0.4% to 14,808.22.

In European equities on Tuesday, the CAC 40 in Paris was up 0.1% while the DAX 40 in Frankfurt added 0.4%.

New York-listed stocks were called largely higher ahead of the opening bell. The Dow Jones Industrial Average is called to open flat, the S&P 500 up 0.2% and the Nasdaq Composite up 0.4%.

‘The blue-chip UK index was led by a rally in financials,’ AJ Bell analyst Russ Mould commented, noting it was Prudential and Standard Chartered among those leading the charge, rising 4.0% and 2.2%.

‘Interestingly, nearly all sectors were in positive territory, implying that investors were feeling upbeat across the board which is a healthy situation to have in markets,’ Mould added.

There was some share price pressure on housebuilding stocks in the FTSE 100, however, with Persimmon falling 4.2% and Barratt falling 0.9%.

York, England-based Persimmon said in 2023 pretax profit slumped to £351.8 million from £730.7 million in 2022, hit by lower volumes and build cost inflation. Diluted earnings per share tumbled to 79.5 pence from 174.3p.

Total revenue decreased 27% to £2.77 billion from £3.82 billion.

Persimmon said it expects market conditions to remain subdued throughout 2024. It expects to deliver between 10,000 and 10,500 completions for 2024, of which it has full planning on 98%, with a housing operating margin in line with 2023.

Beside housebuilder, utilities largely made up the handful of stocks that traded lower on the FTSE 100. Severn Trent fell 0.9%, while SSE lost 0.7%.

The pound was quoted at $1.2790 early Tuesday afternoon, falling from $1.2801 at the London equities close on Monday. The euro climbed to $1.0933 from $1.0923. Against the yen, the dollar climbed to JP¥147.46 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.

XTB analyst Kathleen Brooks commented: ‘This has caused traders to reassess their bet that the Bank of England will delay cutting rates until August, and there are growing expectations that the first BoE rate cut will come in June, and that there will be three cuts from the bank this year.’

The data came ahead of the Bank of England’s next interest rate decision a week on Thursday. Before that rate call, there is UK gross domestic product data for January reported on Wednesday, and a consumer price index reading exactly a week later.

Tuesday afternoon’s US inflation data will put the Federal Reserve in the spotlight ahead of its rate decision a week on Wednesday.

Analysts at ING commented: ‘Our economists agree that we’ll see a consensus 0.3% month-on-month core print, largely driven by housing dynamics as well as insurance and medical cost hikes. This remains at least 0.1% above the pace that would provide the Fed with confidence in a return to the 2% year-on-year target and suggests any rate cut before the June meeting remains unlikely.’

Back in London, shares in CVS Group slumped 21%, while Pets at Home declined 2.3%. The duo pledged to work with the UK’s competition watchdog after it launched a formal investigation into the veterinary sector, warning pet owners may be overpaying for medicines and prescriptions.

The Competition & Markets Authority said an initial review of the sector, announced in September, had highlighted ‘multiple concerns’ in the market. The CMA has provisionally decided that it should launch a formal market investigation.

TP ICAP jumped 13%. 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.

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.

Peel Hunt analyst Stuart Duncan said: ‘There is a generally positive tone to the outlook comments, but the highlight of today’s statement regards Parameta, and the board’s view (which we agree with) that the value of the division is not recognised in the share price. The statement therefore notes that options for unlocking value are being considered, whilst retaining ownership of the asset, and include a potential IPO of a minority stake in the business. This process will likely take some time to conclude, but we view it as positive and potentially resulting in a more appropriate valuation of the business.’

Synthomer jumped 32%. The chemicals manufacturer said trading since the start of 2024 has been ‘cautiously encouraging’, helped by ‘short-term restocking by customers’. It did caution, however, that ‘evidence of broad-based demand recovery remains limited’.

Synthomer said revenue fell 15% to £1.97 billion in 2023 from £2.33 billion in 2022. Its pretax loss ballooned to £106.8 million from £34.2 million.

Brent oil was quoted at $82.22 a barrel early Tuesday afternoon in London, down from $82.36 at the time of the last European equities close. Gold was quoted at $2,171.80 an ounce, down from $2,184.09.

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Issue Date: 12 Mar 2024