11th Sep 2013 12:58
LONDON (Alliance News) - London's blue-chip FTSE 100 index was hit Wednesday by fears that the Bank of England may have to raise interest rates sooner than it is currently guiding after Britain's unemployment rate fell to the lowest level since late 2012 and jobless claims declined more-than-expected.
The pound soared to its highest level against the euro since late January as a result.
But smallcap indices continued to outperform their larger peers with the AIM All-Share hitting a high for the year for a seventeenth consecutive day and the FTSE Smallcap index hitting its highest level for nearly 16 years.
Ahead of the US open the FTSE 100 is down 0.1% while the FTSE 250 is up 0.1%, whilst the AIM All-share is up 1.2%.
Technology stocks are leading the FTSE 100 gainers as ARM holdings, which designs 64-bit processors used in the newly unveiled Apple iPhones, jumps 5.2%. The processors were not expected to be used in smartphones until later in the year.
During the three months to July, the ILO unemployment rate came in at 7.7%, down 0.1 percentage point from the February to April period, according to the ONS. The rate was slightly below the expected 7.8% and was the lowest since September to November 2012. At the same time, the number of people claiming jobseeker's allowance decreased by 32,600 to 1.4 million in August, the smallest number in more than four years.
As the unemployment rate edges closer to the 7% threshold outlined by Bank of England Governor Mark Carney, there are growing fears that interest rates may rise.
House builders were hit by the news, despite Barratt Developments reporting strong results and saying the housing market recovery is spreading beyond London and the southeast.
Following US President Barack Obama's decision to postpone Congress' vote on a proposed military strike on Syria, US futures markets are indicating a mixed open in New York.
The technology-heavy Nasdaq is being called down 0.4%, with Apple expected to open 3.8% lower as investors react negatively to the launch of the latest iPhone. The S&P is anticipated to open down 0.1%, and the Dow is expected to open up 0.01%.
In the economic data calendar, a speech from UK Monetary Policy Committee member David Miles is scheduled at 1530 BST.
By James Kemp; [email protected]
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