13th May 2025 08:07
(Alliance News) - London's FTSE 100 opened mildly lower on Tuesday following a rally in New York on Monday, as investors weigh a US-China trade deal that saw the temporary suspension of tariffs.
Meanwhile, in the UK, the unemployment rate reaches its highest level since 2021 and pay growth slows, while retail sales figures increase.
"If this was a period drama, this would be the scene in which the labour market developed a persistent cough and started to faint into furniture. It’s not that the market is looking in bad shape, there are just some telltale signs that the future may not be desperately healthy," commented Hargreaves Lansdown analyst Sarah Coles.
"Wages are rising ahead of inflation, so we're still feeling better off with each passing month. The most recent HL Savings & Resilience Barometer shows the average household now has GBP196 left at the end of the month, which is why people are able to put aside 5.5% of their income for the future. Meanwhile, employment has risen over the past year, unemployment hasn't moved over the previous quarter and economic activity has fallen."
In early corporate news, DCC reports a double-digit decline in profit and Greencoat Renewables applies for a secondary listing in Johannesburg.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: opened 0.1% lower, or 6.59 points, at 8,598.39
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Hang Seng: down 1.6% at 23,179.57
Nikkei 225: closed up 1.4% at 38,183.26
S&P/ASX 200: closed up 0.5% at 8,271.80
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DJIA: closed up 1,160.72 points, or 2.8%, at 42,410.10
S&P 500: closed up 184.28 points, or 3.3%, at 5,844.19
Nasdaq Composite: closed up 779.43 points, or 4.4%, at 18,708.34
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EUR: down at USD1.113 (USD1.1114)
GBP: down at USD1.3203 (USD1.3206)
USD: down at JPY147.88 (JPY148.18)
Gold: up at USD3,263.93 per ounce (USD3,236.25)
(Brent): down at USD64.98 a barrel (USD65.21)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
10:00 BST eurozone ZEW economic sentiment survey
12:00 BST UK Bank of England Executive Director James Benford speaks
13:30 BST US CPI
13:55 BST US Redbook index
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The UK unemployment rate increased slightly in the three months to March while pay growth declined, numbers on Tuesday showed. The Office for National Statistics said the UK jobless rate was 4.5% in the three months to March 2025, in line with an FXStreet-cited consensus and up from 4.4% in the previous three-month period to February. This is the highest rate since June to August 2021. The employment rate for people aged 16 to 64 was estimated at 75%, unchanged from the previous quarter. Meanwhile, the economic inactivity rate was estimated at 21.4%, up slightly from 21%. Vacancies fell by 42,000 to 761,000 during the quarter, which was the 34th consecutive quarterly decline. Reductions were seen in 13 out of the 18 industry sectors, and vacancies were 34,000 lower than the pandemic levels in January to March 2020. The number of payrolled employees fell by 0.2% or 53,000 during the quarter, and was reduced by 4,000 compared to January to March 2024. Early estimates for payrolled employees in April are 0.1% lower, down by 33,000. Annual growth in regular pay, which excludes bonuses, was 5.6%, edging down from 5.9% in the three months to February, and falling short of an FXStreet-cited consensus for 5.7%. Annual growth including bonuses was 5.5%, slightly down from 5.6% and outperforming an FXStreet consensus for 5.2%. Adjusted for inflation using the consumer prices index, including owner occupiers' housing costs, real regular pay rose 1.8% and total pay was up 1.7% in the quarter. This compared to 2.1% and 1.9% respectively in the preceding quarter.
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UK retail sales increased in March and April, even when accounting for the later timing of Easter, figures on Tuesday showed. Total retail sales in the UK increased 7% annually in April, compared with a 4% decrease in the same month last year, according to data from the British Retail Consortium. This exceeded the three-month average growth rate of 2.9% and the 12-month average of 1.4%. The BRC added that for March and April together, mitigating the different timings of Easter, total sales increased 4.3% compared to March and April in 2024. "The sunniest April on record brought with it a boost to retail sales," commented BRC Chief Executive Officer Helen Dickinson. "While the stronger performance was partially a result of Easter falling in April this year, the sunshine prompted strong consumer spending across the board. Food sales performed well as people brought together their family and friends for Easter celebrations, while sales of DIY, homeware and gardening goods shone bright as people made the most of the weather. Clothing sales, where growth has been sluggish in recent months, also improved as consumers refreshed their wardrobes for the new season. But clouds loom on the horizon as new costs begin to bite. Even a strong April performance will do little to make up for the extra [GBP7 billion] facing the industry this year. Both Employer National Insurance Contributions and the National Living Wage rose last month, and retailers face another [GBP2 billion] bill when a new packaging tax comes in later this year."
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New home registrations in the UK jumped by more than a third in the first quarter of 2025 compared with the same period a year earlier, according to a warranty and insurance provider. Across the UK, 29,356 new homes were registered to be built in the first quarter of this year, which was a 36% increase on the same quarter in 2024 and 17% more than in the fourth quarter of 2024, the National House Building Council, NHBC said. The NHBC has a 70%-plus share of the UK warranty market. Its figures also indicate the stock of new properties in the pipeline because homes are registered with the NHBC before being built. Within the total, 20,653 new homes registered in the private sector in the first quarter of 2025, marking a 62% jump compared with the first quarter of 2024. There were also 8,703 new homes registered in the rental and affordable sector in the first quarter of 2025, which was a 2% fall compared with the first quarter of 2024. London was the only region or nation where new build registrations fell annually in the first quarter of 2025. The NHBC said registrations in London were affected "by the new building safety regime for high rise buildings and lower demand from housing associations where capital budgets remain focused on existing stock".
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Washington and Beijing's agreement to temporarily reduce tit-for-tat tariffs marks an improvement for trade, but levels remain high and are likely to weigh on economic growth, said a senior Federal Reserve official. The comments by Governor Adriana Kugler, at a symposium in Ireland, came shortly after the US and China said they would sharply lower tariffs on each other's goods for 90 days while negotiations continued. "Obviously that's an improvement as far as trade between the two countries" is concerned, Kugler said. But she added that levels remain "pretty high," noting that the world's biggest economy imports many items from China. With the latest agreement, the US is set to lower its tariffs on Chinese goods from 145% to 30%, while China will reduce its retaliation from 125% to 10%. "I still expect an increase in prices and a slowdown in the economy," Kugler warned, although she anticipates this will not happen to the same extent as before. All eyes are on whether the 90-day pause will be sustained, she said, adding that things are moving in the right direction for now. The uncertainty associated with these tariffs has already generated effects on the economy, bogging down sentiment and causing companies to ramp up imports as they try and get ahead of fresh levies.
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The US has approved a USD1.4 billion arms sale to the UAE. US officials said Monday that the State Department has authorised the sale of military aircraft and equipment to the Gulf state, ahead of President Donald Trump's visit this week. The deal includes six Boeing CH-47F Chinook helicopters and other equipment for USD1.32 billion. "The UAE will use these assets in search and rescue, disaster relief, humanitarian support, and counterterrorism operations," officials from the State Department Bureau of Political-Military Affairs said in a statement. Additionally, the US will provide USD130 million in components for Lockheed Martin F-16 fighter jets.
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The US announced new sanctions against Iran over its nuclear programme, despite ongoing negotiations between the two countries over the issue. The latest sanctions target three Iranian citizens and an Iranian entity with links to Tehran's Organization of Defensive Innovation & Research, also known by its Persian acronym SPND. "Iran continues to substantially expand its nuclear program and carry out dual-use research and development activities applicable to nuclear weapons and nuclear weapons delivery systems," Secretary of State Marco Rubio said in a statement. The US announced the new sanctions a day after a fourth round of talks with Iran concluded. No major breakthrough was announced after the talks, but both sides voiced cautious optimism. The sanctions freeze any assets that the targeted people and entity may have in America and bans business dealings with them.
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The US president is considering offering sanctions relief to Syria as it seeks to rebuild after a grinding decade-plus civil war. "We are going to have to make a decision on the sanctions, which we may very well relieve. We may take them off of Syria because we want to give them a fresh start," Trump told journalists at the White House prior to departing on a trip to the Middle East. Syria's Islamist authorities, who toppled long-time president Bashar al-Assad in December, are working to rebuild the country's infrastructure and economy after almost 14 years of devastating conflict. The new government has been pushing for Assad-era sanctions to be removed to revive the country's battered economy and support reconstruction. Syria's foreign ministry welcomed Trump's remarks and said it "considers them an encouraging step towards ending the suffering of the Syrian people".
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BROKER RATING CHANGES
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UBS raises Entain to 'buy' (neutral) - price target 920 (820) pence
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Jefferies cuts Victrex price target to 930 (960) pence - 'buy'
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Barclays cuts Smurfit Westrock price target to 4,810 (5,105) pence - 'overweight'
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COMPANIES - FTSE 100
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DCC reports an 18% decline in pretax profit for its financial year that ended March 31, falling to GBP294.9 million from GBP359.2 million the year before, as revenue comes in 4.5% lower at GBP18.01 billion against GBP18.85 billion. The firm records an amortisation and impairment of intangible assets charge totalling GBP181.4 million, up 75% from GBP103.5 million a year prior. DCC declares a final dividend of 140.21 pence per share, bringing its total dividend to 206.40p per share. This is 5.0% higher than 196.57p the year before. Following the disposal of DCC Healthcare for an enterprise value of GBP1.05 billion, DCC intends to return GBP800 million in proceeds to shareholders, which it will begin "shortly" with the launch of a buyback programme for up to GBP100 million. The company will return GBP600 million to shareholders in a form to be announced at the completion of the DCC Healthcare sale, with the final GBP100 million to be returned following receipt of the unconditional deferred consideration in around two years. Chief Executive Officer Donal Murphy says: "We are pleased to report that we delivered another year of good growth, while making strategic progress to simplify the group to focus on our opportunity in Energy. Our sale of DCC Healthcare enables a material return of capital to shareholders. We will focus our efforts on Energy, our largest and highest-returning business. We are energised about the future." DCC expects financial 2026 to be a year of "good operating profit growth on a continuing basis".
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COMPANIES - FTSE 250
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Bytes Technology says pretax profit grew 21% to GBP74.6 million in its financial year that ended February 28, from GBP61.6 million a year prior. Revenue rises 4.9% to GBP217.1 million from GBP207.0 million, while cost of sales is reduced 12% to GBP53.9 million from GBP61.2 million. The firm swings to a GBP108,000 increase in loss allowance on trade receivables against a GBP1.2 million decrease on-year, though this is offset administrative expenses being up 10% to GBP96.9 million from GBP87.8 million. Bytes Technology declares a final dividend of 6.9 pence per share, up 15% on-year from 6.0p and bringing the total dividend for the year to 10p per share. It also declares a special dividend of 10.0p, 15% higher than 8.7p the year before. "We are well positioned to respond to the evolving demands we see in our markets, including cloud computing, cybersecurity, AI and managed services and deliver another year of double-digit gross profit growth together with high single-digit operating profit growth in [financial 2026]", the company says.
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OTHER COMPANIES
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Greencoat Renewables announces it is in the process of applying for a secondary listing on the Alternative Exchange of the Johannesburg Stock Exchange. It notes it has received "strong interest" from a number of South African institutional investors, and believes that admission to trading in Johannesburg will enhance liquidity for shareholders, diversify its shareholder base and position the firm for growth by providing access to a "new and deep capital market". The listing is expected to become effective later this year, for which Greencoat will not place or issue any new shares. Greencoat also says it has agreed to sell six Irish onshore wind assets that total 115.7 megawatts in net capacity for an up-front consideration of EUR139 million, and EUR17 million in non-contingent deferred consideration over 2026 and 2027. It expects the net asset value accretive disposal to close in June. The sale is being made to HitecVision, and comprises 100% stakes in five of the assets and a 50% stake in the remaining one. Proceeds from the sale will be used to repay the firm's revolving credit facility and "substantially reduce" the EUR201 million drawn balance reported in its first quarter of 2025. Greencoat continues to explore further disposals and is in "advanced" talks over the sale of a significant minority stake in its 50 megawatt Andella wind farm in Spain. "This transaction reflects the disciplined execution of our capital allocation strategy, unlocking value from our portfolio and further enhancing our financial strength," says Paul O'Donnell, partner at Schroders Greencoat.
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Marston's delivers GBP19.5 million in pretax profit for the 26 weeks that ended March 29, swinging from a GBP26.9 million loss the year before. This is despite revenue falling 0.2% to GBP427.4 million from GBP428.1 million, as the firm records a positive GBP2.5 million interest rate swap movement against a negative GBP25.8 million movement a year prior. This brings net finance costs 47% lower at GBP41.8 million from GBP78.7 million. Net asset value per share is up 13% on-year to 107 pence from 95p. "The first half has been a period of significant momentum for Marston's, with the execution of a market leading pub operating model, investment in our differentiated pub formats and progress in our digital transformation driving strong margin and profit growth," says Chief Executive Officer Justin Platt. "We remain confident in achieving our financial goals for the full year and focused on executing our strategy as a pure play hospitality company to deliver sustainable growth and increasing returns for our shareholders." Marston's says like-for-like sales in the five weeks since March 29 are 11% higher, with the firm expecting full-year capital expenditure to total around GBP60 million. The company anticipates financial 2025 performance in line with current market expectations, citing a company-compiled consensus for GBP66.8 million in underlying pretax profit. This would be up 59% from GBP42.1 million in financial 2024.
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Tech investor SoftBank, a major player in the US Stargate artificial intelligence drive, on Tuesday posted a swing to a full-year profit. The Tokyo-based company logged a net profit of JPY1.15 trillion yen, or USD7.8 billion, for the financial year to March 2025, compared to a net loss of JPY227 billion in the previous financial year.
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By Emily Parsons, Alliance News reporter
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