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London open: Stocks climb ahead of jobs data; Esure agrees £1.2bn buyout
London stocks edged higher in early trade on Tuesday as worries about the Turkish crisis eased – at least for now – with investors looking ahead to the latest UK jobs data.
At 0830 BST, the FTSE 100 was 0.2% firmer at 7,656.21, while the pound was up 0.2% against the dollar and the euro at 1.2801 and 1.1212, respectively.
“There is a demand for profit-taking in the markets after powerful movements at the end of last week and a very aggressive trading start of the week,” said analysts at FxPro. “On Monday afternoon there was a cautious demand for some risky assets, as investors considered recent sell-off as gone too far. However, investors should be cautions. The key problems that have caused pressure in the markets are still unresolved, which means that a new wave of flight from risks is likely to be in the near future.”
However, in the UK at least there is some important jobs data will that will be the main focus on Tuesday, with the Office for National Statistics publishing the unemployment rate, average earnings and claimant count at 0930 BST.
Unemployment is forecast to remain constant at multi-decade lows of 4.2% in June, though several economists see a potential drop to 4.1%.
London Capital Group analyst Jasper Lawler said: “Looking further behind recent figures, there have been employment gains of 160,000 on average over the last three months; an impressive number particularly given the uncertainties presented by Brexit. The fact that the labour market has managed to continue generating employment was one of the key factors behind the BoE interest rate hike in early August.
“Whilst employment gains are expected to be in the region of 100,000, a decline from previous months, this would still be considered a solid generation of jobs and keep the pound happy. Looking at average earnings, both including and excluding bonuses no changes are forecast with growth expected to remain at 2.5% and 2.7% respectively.”
In corporate news, Esure rallied as it agreed to be bought by private equity firm Bain Capital for 280p a share in cash. The insurer also posted a drop in first-half pre-tax profit, partly on the back of adverse weather-related claims costs.
Royal Mail was on the front foot even as investors shrugged off a £50m fine from Ofcom for a “serious breach” of competition law, after the regulator found the postal group had “abused its dominant position” in the letter delivery market.
Plastic piping and ventilation systems manufacturer Polypipe advanced on the back of a resilient first-half performance, while builders merchant Grafton Group edged up after saying it was raising €160m (£144m) through a private placing in the US, with the proceeds set to be used for debt refinancing and general corporate purposes.
Antofagasta was under the cosh as it said lower sales tonnages and copper grades hit interim profits, although the miner said it expected a better second half.
On the broker note front, Citi replaced Rio Tinto with BHP Billiton on its ‘focus’ list, while Spectris was lifted to ‘add’ at Peel Hunt and Elementis was upgraded to ‘buy’ at Berenberg.
Card Factory was a big faller after it was cut to ‘sell’ at Berenberg.
