London midday: Stocks extend losses after wages data; miners weigh
London stocks fell to a six-week low by midday on Wednesday as data revealed that UK wages continued to lag inflation, with some signs of weakness in the employment market.
The FTSE 100 was down 0.6% to 7,373.07, roughly the same level as it was at the beginning of October, while the pound was down 0.4% versus the euro at 1.1115 but flat against the dollar at 1.3160, as the greenback was weighed by worries about the progress being made on US tax reform.
Equities are extending losses from the previous session in a "general risk-off move", said analyst Mike van Dulken at Accendo Markets, pointing to metals prices hit by Chinese data and an overnight IEA report adding fuel to the global oil oversupply story.
"Compounding this are nerves about tomorrow's US tax vote and dovish comments from the Fed's Evans which have sent USD lower, resulting in reciprocal yet unwelcome GBP and EUR strength this side of the pond," he said.
Oil prices were also gushing lower after the American Petroleum Institute said that there was a surprise build-up in US inventories of crude oil and gasoline. West Texas Intermediate and Brent crude were down 1.2% to $55.03 a barrel and $61.45, respectively by noon on Wednesday.
There were concerns for the UK retail sector too from another official report of low wage growth, continuing the tight grip on household incomes. Spreadex analyst Connor Campbell said the UK’s “eye-wateringly high inflation means real wages actually fell 0.5%, another blow to the wallets of the nation’s consumers in the run up to the economically-draining Christmas period”.
Figures from the Office for National Statistics showed average weekly earnings for the three months to September rose 2.2% compared to the same period last year, which was more than the 2.1% consensus forecast but down from a revised August figure of 2.3% and well below the 3% rate of inflation.
Earnings excluding bonuses increased 2.2% in the period, in line with the 2.2% expected by economists and growth in the preceding period.
For the month of September alone, the figure rose to 2.6% from 2.4%, although excluding bonuses, pay growth was unchanged on the month.
Meanwhile, the ILO unemployment rate stayed at 4.3% in the three months to September, as expected, as unemployment fell by 59,000 between July and September to 1.42m.
However, there was a 14,000 fall in employment in the three months to September, the first decline since April 2013, which dragged annual employment growth down to 0.6%, the lowest since 2012.
More timely data on employment, in the form of the October claimant count rate, remained at 2.3%, with a 1.1k rise in jobless claims.
Barclays economists felt the report showed slowing employment growth, reversing some of the strength seen earlier this year, while Howard Archer, chief economic advisor to the EY ITEM Club, said there were "signs in the latest data that the UK labour market could be faltering after extended resilience".
Stocks that were faring worst included heavily-weighted mining stocks as metals prices fell, with Rio Tinto, Glencore, BHP Billiton, Anglo American and Antofagasta all extending losses from the previous session.
TalkTalk Telecom took a beating as it drummed up an impressive number of new customers in the first half of the year but at the expense of profits, which fell into the red. Management reiterated that their focus in on growth before profits, but investors did not like the interim dividend being halved.
Legal & General Group retreated after it said that its investment management arm has entered into an agreement to acquire Canvas, an ETF platform, for an undisclosed sum.
Housebuilder Barratt Developments was on the back foot despite saying it has made a strong start to the year and remains confident of delivering a good performance in FY18, while sector peer Crest Nicholson was weaker despite posting a rise in full-year unit completions, as it warned that maintaining momentum through planning is a major challenge for the industry.
Wizz Air flew lower after it signed a memorandum of understanding with Airbus relating to the purchase of a further 146 Airbus A320neo family aircraft, while Card Factory slipped after posting revenue growth but saying margins were under pressure.
On the upside, precious metals miners Fresnillo shone after an upgrade to ‘buy’ at HSBC.
AstraZeneca was trading up after it and its global biologics research and development arm, MedImmune, announced that the US Food and Drug Administration has approved Fasenra (benralizumab) for the add-on maintenance treatment of patients with severe asthma aged 12 years and older, and with an eosinophilic phenotype.
Cobham rose after saying that trading remains on track as it reiterated its full-year guidance and added that its strategic review is still ongoing.
Great Portland Estates advanced after reporting a 1% improvement in its portfolio valuation in its first half results, with the value of its developments rising 1.6% over the half-year.
Market Movers
FTSE 100 (UKX) 7,373.07 -0.56%
FTSE 250 (MCX) 19,720.06 -0.64%
techMARK (TASX) 3,428.50 0.01%
FTSE 100 - Risers
BT Group (BT.A) 249.60p 2.40%
Bunzl (BNZL) 2,151.00p 1.70%
Fresnillo (FRES) 1,304.00p 1.64%
Randgold Resources Ltd. (RRS) 7,070.00p 1.14%
SSE (SSE) 1,358.00p 1.12%
Vodafone Group (VOD) 229.40p 1.04%
Marks & Spencer Group (MKS) 313.40p 0.97%
Imperial Brands (IMB) 3,121.50p 0.95%
Babcock International Group (BAB) 749.00p 0.88%
Rolls-Royce Holdings (RR.) 912.00p 0.83%
FTSE 100 - Fallers
Glencore (GLEN) 341.50p -3.74%
NMC Health (NMC) 2,753.00p -3.51%
Anglo American (AAL) 1,412.00p -2.96%
3i Group (III) 907.50p -2.42%
Antofagasta (ANTO) 927.00p -2.32%
Rio Tinto (RIO) 3,509.00p -2.31%
BHP Billiton (BLT) 1,355.50p -2.31%
WPP (WPP) 1,263.00p -2.09%
Mondi (MNDI) 1,739.00p -2.08%
Johnson Matthey (JMAT) 3,319.00p -1.57%
FTSE 250 - Risers
Card Factory (CARD) 289.50p 3.91%
Dairy Crest Group (DCG) 560.50p 2.75%
Cobham (COB) 129.70p 2.13%
Provident Financial (PFG) 864.50p 1.41%
Great Portland Estates (GPOR) 616.50p 1.23%
TBC Bank Group (TBCG) 1,705.00p 1.13%
Hansteen Holdings (HSTN) 135.00p 1.05%
Intermediate Capital Group (ICP) 1,016.00p 0.99%
Electrocomponents (ECM) 668.50p 0.98%
QinetiQ Group (QQ.) 220.90p 0.96%
FTSE 250 - Fallers
TalkTalk Telecom Group (TALK) 172.80p -8.81%
Crest Nicholson Holdings (CRST) 476.70p -8.15%
Ferrexpo (FXPO) 234.60p -4.24%
Vedanta Resources (VED) 755.00p -3.21%
Ascential (ASCL) 348.50p -2.95%
Hunting (HTG) 496.10p -2.92%
OneSavings Bank (OSB) 378.70p -2.90%
Tullow Oil (TLW) 176.40p -2.86%
Go-Ahead Group (GOG) 1,623.00p -2.81%
Nostrum Oil & Gas (NOG) 359.70p -2.65%