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LONDON MARKET MIDDAY: Stocks mixed amid bleak UK labour report

8th Sep 2023 11:48

(Alliance News) - Stock prices in London were mixed at midday on Friday, after a report from KPMG/REC on the UK labour market painted a grim picture.

The FTSE 100 index was down 12.17 points, 0.2%, at 7,429.55. The FTSE 250 was up 35.85 points, 0.2%, at 18,419.70, and the AIM All-Share was down 1.14 points, 0.2%, at 734.54.

The Cboe UK 100 was down 0.1% at 740.29, the Cboe UK 250 was up 0.3% at 16,058.15, and the Cboe Small Companies was up 0.3% at 13,557.40.

This week investors have been eyeing the next interest rate decision from the Bank of England amid some weak economic data and dovish rhetoric from the central bank.

On the back of this, the pound has slumped in the past few days as investors now anticipate that the Bank of England is close to the end of its rate hiking cycle.

The pound was quoted at USD1.2478 at midday on Friday in London, lower compared to USD1.2493 at the equities close on Thursday.

On Wednesday, BoE Governor Andrew Bailey hinted that the UK central bank was close to ending a prolonged policy of raising interest rates amid expectations that inflation will fall substantially by the end of the year.

"I think we are much nearer now to the top of the cycle," Bailey told a panel of cross-party lawmakers gathered to question the BoE chief on the state of the UK economy with UK inflation the highest among G7 nations.

"And I'm not therefore saying we're at the top of the cycle because we've got a meeting to come but I think we are much nearer to it," he added.

Adding to this rhetoric on Friday, there was some new evidence from KPMG and REC UK that showed that interest rates were doing their job.

Figures showed that the UK jobs market slowed sharply in August as the weaker economic outlook depressed recruitment activity. Davy Research said the reading painted "a grim picture" of the UK labour market.

In the FTSE 100, Melrose Industries lost 6.9%, giving back its gains from Thursday.

On Thursday, Melrose ended 5.3% higher after the aerospace manufacturer upgraded it full-year guidance on the back of some strong interim results.

Berkeley lost 0.8% on the back of its trading update. The housebuilder reported a 35% drop in the value of underlying private sales reservations.

AJ Bell's Russ Mould said the update "surprised nobody" as the update showed "just how tough" the housing market is right now in the UK.

Nonetheless, Berkeley reaffirmed its full-year guidance on Friday, expecting to deliver "at least" GBP1.05 billion in pretax profit across the current and next financial years, which end on April 30. In financial 2023, it had reported a pretax profit of GBP604.0 million.

Other blue-chip housebuilders were down at midday Friday. Barratt Developments lost 0.7%, and both Taylor Wimpey and Persimmon shed 0.4%.

In the FTSE 250, Petershill Partners was down 15%. It swung to a profit in the first half of the year, but said lower partner realised performance fees caused its total income to fall.

In the six months that ended June 30, the investment vehicle swung to a pretax profit of USD129.3 million from a USD420.1 million loss a year ago. It reported a fair value gain on assets and liabilities of USD48.3 million, swung from a loss of USD612.5 million the year before.

Total income including interest, however, fell by 23% to USD138.0 million from USD179.0 million, driven by lower partner realised performance fees as well as partner fee related earnings.

Computacenter rose 15% on its upbeat outlook and strong interim results.

The Hatfield, England-based computer services firm said pretax profit for the six months that ended June 30 was GBP122.8 million, up 14% from GBP107.8 million a year previous. Total revenue increased 27% to GBP3.58 billion from GBP2.83 billion.

Looking ahead, Computacenter said it is on track to deliver its 19th consecutive year of adjusted diluted EPS growth, and trading in the third quarter so far is progressing well.

Shares in Round Hill Music surged 65% to USD1.13.

Round Hill said it has agreed to a cash takeover offer with Alchemy Copyrights. The offer is for USD1.15 a share; a premium of 67% to Thursday's closing price and values Round Hill Music at USD468.8 million.

Chair Robert Naylor said: "The board is pleased to present this opportunity for liquidity at a premium to both the share price and the IPO price, as well as at a narrow discount to economic net asset value per share. The recommended offer represents excellent value for shareholders."

In European equities on Friday, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was down 0.7%.

Consumer price inflation in Germany cooled a bit in August, in line with preliminary data, the Federal Statistics Office confirmed on Friday.

On an annual basis, the consumer price index rose 6.1% in August, cooling slightly from a 6.2% rise in July. This matched the FSO's first estimate.

Core inflation - which excludes items such as food and energy - was 5.5% in August on an annual basis, unchanged from the month prior and in line with preliminary data.

Ruth Brand, president of the FSO, said: "The increases in energy and food prices exceed overall inflation and keep the inflation rate high."

The euro stood at USD1.0701 at Friday midday, virtually unchanged against USD1.0702. Against the yen, the dollar was trading at JPY147.36, up compared to JPY147.23.

Stocks in New York were called lower. The Dow Jones Industrial Average, the S&P 500 index, and the Nasdaq Composite were all called down 0.2%.

Brent oil was quoted at USD90.39 a barrel at midday in London on Friday, up from USD90.31 late Thursday. Gold was quoted at USD1,925.01 an ounce, lower against USD1,919.30.

Still to come on Friday's economic calendar, there are US export sales and wholesale trade readings.

By Sophie Rose, Alliance News reporter

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