London close: Stocks weaker as UK unemployment holds steady

(Sharecast News) - London's stock markets closed lower on Tuesday as fresh UK jobs data signalled a likely pause by the Bank of England in its interest rate policy this week. The FTSE 100 index dropped 0.81% to 8,195.20 points, while the FTSE 250 fell 1.3% to 20,542.86 points.

In currency markets, sterling was last up 0.24% on the dollar to trade at $1.2713, as it gained 0.35% against the euro, changing hands at €1.2108.

"Despite another 25 basis point rate cut being on the cards for Wednesday's FOMC meeting, US yields continue to rise as investors worry about the Fed pausing or slowing its monetary loosening cycle in 2025," said IG senior analyst Axel Rudolph.

"Despite US retails rising more than expected US stock indices drop across the board as US industrial production unexpectedly contracts.

"The Dow Jones Industrial Average is on track for its ninth straight session of losses with even the Nasdaq 100 coming off this week's record high."

Rudolph noted that European shares, with the exception of the French CAC 40, took a small hit on Tuesday, ignoring German investor morale which surprised to the upside, and instead focusing on an unexpectedly narrower euro area trade surplus.

"The beleaguered CAC 40, down 2% year-to-date, seems to have run out of sellers and even managed to prise a small gain from the market."

UK unemployment steady in October quarter, eurozone trade surplus declines

In economic news, UK unemployment remained steady in the three months to October, while wage growth accelerated, according to the Office for National Statistics.

The unemployment rate held firm at 4.3%, unchanged from the previous month.

Average earnings, both including and excluding bonuses, rose 5.2%, up from the previous quarter's 4.9% for regular pay.

Private sector wage growth also climbed to 5.4%, reflecting ongoing labor market resilience.

However, job vacancies declined for the 29th consecutive month, falling by 31,000 to 818,000, though they remain above pre-pandemic levels.

"After slowing steadily for over a year, growth in pay excluding bonuses increased slightly in the latest period, driven by stronger growth in private sector pay," said Liz McKeown, director of statistics at the ONS.

"Pay growth including bonuses increased by more, but this reflects previous figures being affected by the one-off payments made to some public sector employees in 2023.

"The number of people on payrolls grew slightly in October, but we have seen annual growth rates continue to slow, showing a consistent trend with our latest jobs data from employers."

On the continent, eurozone trade data for October showed a sharp decline in the surplus, with the balance narrowing to €6.8bn, its second-lowest level in over a year.

That marked a significant drop from September's revised €11.6bn and fell short of expectations for €11.7bn.

A shrinking surplus in chemicals and machinery, coupled with a widening energy deficit, weighed on the balance.

Exports rose 2.1% year-on-year to €254bn, while imports climbed 3.2% to €247.2bn, reflecting persistent trade pressures.

German economic sentiment meanwhile presented a mixed outlook, with the Ifo Institute reporting a drop in its business climate index for December to 84.7, the lowest level since May 2020, driven by weakening future expectations.

However, the ZEW investor sentiment index unexpectedly surged to 15.7, far surpassing forecasts, signaling cautious optimism among investors despite ongoing economic challenges.

Across the Atlantic, US industrial production fell unexpectedly in November, declining 0.1% month-on-month, missing forecasts of a 0.3% increase.

Weakness in mining and utilities offset a modest 0.2% recovery in manufacturing output, supported by the end of the Boeing strike.

Revised figures for September and October showed weaker manufacturing gains, and overall capacity utilization dropped to 76.8%, underlining continued softness in the industrial sector.

Bunzl in the red on deflation concerns, Britvic manages gains

On London's equity markets, Bunzl dropped 6.69% after the distribution and outsourcing group warned that persistent deflation would impact its performance.

While volume growth in the third quarter is expected to continue into the fourth, the company forecast a slight impact on adjusted operating profit in 2024, particularly in its continental European operations.

Oil majors BP and Shell fell 1.3% and 1.83%, respectively, as weaker oil prices weighed on sentiment.

Harbour Energy was also caught in the downturn, losing 3.3%.

Tullow Oil slumped 11.33% after Kosmos Energy announced it would not pursue an acquisition of the company, offering no specific reason for its decision.

BT Group shed 1.3% following news that the UK government had approved Bharti Global's acquisition of a 24.5% stake in the telecom firm from France's Altice.

Retailer Marks & Spencer dropped 2.19% despite receiving a 'buy' rating from Kepler Cheuvreux, which highlighted its strong management and growth prospects but noted its valuation multiples remain low compared to peers.

Capita plunged 14.45%, after the outsourcer reported an 8% revenue drop for the 11 months to 30 November, citing contract losses.

It raised its cost savings target to £250m by the end of 2025 and announced plans to leverage AI technologies to improve efficiencies.

Chemring Group also slid, losing 13% by the close, despite reporting a record order book amid elevated geopolitical tensions.

On the upside, Britvic gained 0.85% after the UK's competition regulator approved Carlsberg's acquisition of the soft drinks maker.

Meanwhile, London Stock Exchange Group rose 0.35% following an upgrade to 'buy' from 'neutral' by UBS.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,195.20 -0.81% FTSE 250 (MCX) 20,542.86 -1.30% techMARK (TASX) 4,623.62 -0.70%

FTSE 100 - Risers

GSK (GSK) 1,333.50p 1.06% Haleon (HLN) 384.70p 1.00% Compass Group (CPG) 2,672.00p 0.64% Sage Group (SGE) 1,305.00p 0.46% Halma (HLMA) 2,783.00p 0.43% Taylor Wimpey (TW.) 124.65p 0.40% Croda International (CRDA) 3,371.00p 0.33% Barratt Redrow (BTRW) 435.80p 0.32% International Consolidated Airlines Group SA (CDI) (IAG) 297.30p 0.30% Persimmon (PSN) 1,239.00p 0.28%

FTSE 100 - Fallers

Bunzl (BNZL) 3,356.00p -5.68% JD Sports Fashion (JD.) 96.24p -2.77% WPP (WPP) 857.80p -2.66% Coca-Cola HBC AG (CDI) (CCH) 2,702.00p -2.53% Diageo (DGE) 2,536.00p -2.46% BAE Systems (BA.) 1,170.00p -2.26% Marks & Spencer Group (MKS) 388.90p -2.19% Hiscox Limited (DI) (HSX) 1,124.00p -2.19% 3i Group (III) 3,617.00p -2.16% Barclays (BARC) 264.55p -2.13%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 103.90p 3.90% Wizz Air Holdings (WIZZ) 1,513.00p 2.65% Raspberry PI Holdings (RPI) 500.50p 2.23% Future (FUTR) 964.00p 2.06% Auction Technology Group (ATG) 573.00p 1.42% Trustpilot Group (TRST) 308.00p 1.15% SDCL Energy Efficiency Income Trust (SEIT) 55.10p 1.10% 3i Infrastructure (3IN) 315.50p 0.96% Britvic (BVIC) 1,305.00p 0.85% Allianz Technology Trust (ATT) 421.50p 0.84%

FTSE 250 - Fallers

Chemring Group (CHG) 314.50p -13.00% PureTech Health (PRTC) 160.00p -5.88% Genus (GNS) 1,538.00p -5.64% Wood Group (John) (WG.) 65.45p -5.21% Keller Group (KLR) 1,456.00p -4.33% JTC (JTC) 980.00p -3.92% C&C Group (CDI) (CCR) 146.00p -3.57% Lancashire Holdings Limited (LRE) 656.00p -3.53% ICG Enterprise Trust (ICGT) 1,276.00p -3.48% Bakkavor Group (BAKK) 140.00p -3.47%