Proactive Investors -
- FTSE 100 down 3 points
- Unemployment falls unexpectedly
- European EV sales dip
Sterling gets boost on surprise drop in unemployment
The pound got a boost on Tuesday morning after ONS data showed UK unemployment unexpectedly dipped in the three months to June.
Against the dollar, sterling climbed 0.3% to US$1.28, returning to the level for the first time since last-weeks global sell-off.
The euro also dropped against the pound following the ONS data, by 0.3% to 85.3p.
Figures had shown a fall in unemployment from 4.4% to 4.2% over the three months to June, with markets having been expecting a slight increase.
The rise for the pound came “partly as traders shifted their bets slightly on just how long it will be before there’s another interest rate cut,” Hargreaves Lansdown’s Susannah Streeter explained.
ONS data also showed wage growth of 5.4% over the period, which, despite being down on 5.7% previously, may have policymakers worried of an uptick in pay and subsequently inflation once again, Streeter added.
Oil rally ‘peters out’ on Tuesday
Oil prices appeared to steady on Tuesday morning after growing fears over escalating tensions between Iran and Israel had fuelled a post-weekend rally.
Brent crude and West Texas Intermediate held flat at US$81.86 and US$79.65 respectively on Tuesday, following gains of 3% and 3.7% on Monday.
Hargreaves Lansdown (LON:HRGV) analyst Steve Clayton noted the rally had “petered out” overnight, adding “perhaps it was the lack of any early response from Iran after Israel’s assassination of senior Hamas figures, or just profit taking after the sharpest rally for some while”.
Prices had been fuelled by fears of an impending wave of new Iranian airstrikes against Israel, alongside reassuring US economic data last week.
Just Group jumps as profit soars
Just Group PLC (LON:JUSTJ) notched up a 13% gain to lead the FTSE 350’s risers on Tuesday after reporting a spike in first-half underlying profit.
New business sales growth, higher recurring earnings and improved efficiency led a a 44% increase in underlying operating profit to £249 million, the retirement product specialist reported.
This came as retirement income sales climbed 30% to £2.5 billion over the six months to June and margins ticked up from 8.5% to 9.0%.
“We have never been more confident in our ability to deliver sustainable and compounding growth,” chief executive David Richardson commented.
Just Group added second half new business volumes would “be similar to the excellent performance in the first half,” as strong market conditions persist... Read more
Shares climbed 13.4% to 133.14p.
Grocery inflation picks up for the first time in 17 months
Grocery prices climbed at a faster rate over the month to August 4 for the first time since March last year.
According to Kantar analysts, prices across Britain’s supermarkets climbed by 1.8% over the period, against 1.6% a month earlier.
“Having reached its lowest rate in almost three years in July, August saw inflation nudge up again slightly,” Kantar retail and consumer insight head Fraser McKevitt said.
“While this is noticeable following 17 straight months of falling rates, it actually marks a return to the average levels seen in the five years before the start of the cost-of-living crisis.”
Kantar added that prices rose across 182 product categories and fell among 89 others, with spending on special offers rising over the month.
Wine and beer sales benefitted from the Olympic opening ceremony and Euros respectively, as some £10 million was spent on the latter in supermarkets on the day of the final.
J Sainsbury PLC (LON:SBRY) recorded its largest annual market share gain since 1997, of 0.5%, Kantar said, while Tesco PLC (LON:TSCO) and Ocado Group PLC (LON:OCDO) also scored higher sales.
Slowing wage growth sparks debate over next BoE rate cut
Analysts are split over the prospect of further cuts to base interest in the UK this year after data revealed on Tuesday that wage growth was slowing.
Figures from the ONS showed wages climbed by 5.4% between April and June, compared to 5.7% in the previous three months.
Capital Economics deputy chief Ruth Gregory noted the data was “a sign that labour market conditions are continuing to cool,” adding the figures supported the group’s forecast for two more base rate cuts this year.
EY Item Club analysts argued the slowdown was not “sufficiently significant” to prompt Monetary Policy Committee members to vote on back-to-back cuts, however.
On policymakers, EY chief economist Peter Arnold commented: “The doves will interpret slower wage growth as evidence that the inflation shock is dissipating, suggesting that policy can be gradually loosened.
“But the hawks will likely maintain that the rate of pay growth is still too high.”
FTSE 100 climbs early on
The FTSE 100 enjoyed a positive start on Tuesday morning after ONS data signalled Britain’s labour market was stronger than expected in the three months to June.
London’s blue chips added 22 points early on to reach 8,232 following the data, which showed unemployment unexpectedly fell to 4.2% over the period.
“The numbers go some way in justifying the Bank of England’s recent decision to cut interest rates given a relatively stable economy,” interactive investor analyst Richard Hunter commented.
“Although, the timing and amount of the next cut is up for debate, swinging from a possible November reduction to nothing further this year at all.”
The FTSE 250 was also sent higher following the report, by 49 points to 20,726, alongside London’s junior market.