17th Jun 2015 09:39
LONDON (Alliance News) - UK shares are mixed Wednesday mid-morning, but the pound rose after UK unemployment data remained at record lows while the increase in average earnings was the strongest in four years in the three months to April.
The FTSE 100 index is down 0.1% at 6,700.14, while the FTSE 250 is down 0.1% at 17,718.04. The AIM All-Share is outperforming, up 0.1% at 768.00.
In Europe, major indices are slightly higher. The CAC 40 in Paris and the DAX 30 in Frankfurt both are up 0.1%.
UK unemployment held steady at its lowest level in nearly seven years during the three months to April, while pay growth was the strongest in four years, exceeding economists' forecast, figures from the Office for National Statistics showed Wednesday.
The ILO jobless rate for the February to April period was 5.5%, which was down from 5.7% logged for the three months to January. It also was lower than the 6.6% recorded in the same period last year. The unemployment rate was in line with economists' expectations and was the lowest since April-June 2008, when the figure was 5.4%. The number of unemployed declined by 43,000 from the previous three months to 1.81 million, the lowest since the June to August period of 2008.
Average earnings including bonuses grew 2.7% year-on-year during the three months to April. Economists had forecast 2.1% growth. The latest increase was the highest since June to August 2011, when pay grew 2.7%. Excluding bonuses, pay grew 2.7% in the three months to April, the highest since December to February 2009.
The number of Britons claiming jobless benefits in May declined by 6,500 persons from the previous month to 791,800 people. The claimant count decrease was much less than the 13,800 fall that economists' predicted and the smallest monthly decline since February 2013. The claimant count rate was 2.3% in May.
Meanwhile, the Bank of England policy makers decided unanimously to keep in interest rates at 0.5% in their last monetary policy meeting on June 3. However, the central bank said in a statement that for two members, the immediate policy decision remained finely balanced between voting to hold or raise UK interest rates.
Bank of England's Monetary Policy Committee member Ian McCafferty had said earlier this month that the UK economy has started to return to normal conditions and the time to end loose monetary policy is nearing.
"The time of the extraordinary policy stance of recent years is gradually drawing to a close," he had said.
The other MPC member to consider the decision finely balanced was Martin Weale.
Following the release of the UK unemployment and earnings data and the MPC meeting minutes, the pound rose to USD1.5726.
After the London market close, attention then will turn to the US, where the Federal Reserve announces its interest rate decision and economic projections at 1900 BST. It will be followed by Fed Chair Janet Yellen's press conference at 1930 BST.
"This meeting could give crucial hints as to not only the timing of the rate hike, but also, and probably more importantly, how quickly future hikes will take off," says Hantec Makets analyst Richard Perry. "The uncertainty for this has made even the highly volatile euro sit down more cautiously in the past few days."
The euro is currently trading higher at USD1.1268.
Ahead of the US Fed's decision, Wall Street futures point to a higher open, with the DJIA, the S&P 500 and the Nasdaq 100 all pointed up 0.3%. Still in the economic calendar, US EIA crude oil stocks are at 1530 BST.
On the London Stock Exchange, grocers J Sainbury, down 1.0%, Tesco, down 0.9%, and Wm Morrisons Supermarkets, down 0.8%, are amongst the biggest blue-chip fallers after Credit Suisse initiated its coverage on all of them.
Credit Suisse initiated J Sainsbury and Tesco with an Underperform recommendation, while placing a Neutral stance on Wm Morrison Supermarkets.
FTSE 250-listed Ocado Group is up 1.9%, after Credit Suisse initiated the online grocery delivery company with an Outperform recommendation.
Meanwhile, Berkeley Group Holdings is the best mid-cap performer, up 8.5%. The housebuilder joined its peers in reporting higher profit and revenue for its last financial year as its average selling prices rose strongly and it booked gains on land and asset sales. It also said the clear UK election result had underpinned its outlook.
Trading in the opposite direction, Betfair Group is down 2.9% at 2,439 pence, even though it reported growth in pretax profit in its recently-ended financial year as a rise in customer numbers led to double-digit sales growth in all three of its divisions.
However, Panmure Gordon downgraded the bookmaker to Hold from Buy, raising its price target to 2,334p from 1,317p, as the broker feels revenue growth will be slow moving forward, while competition will increase due to reduced industry profit margins caused by the UK point of consumption tax.
By Daniel Ruiz; [email protected]
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