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London open: Stocks tick down ahead of jobs data; Lloyds rallies on results
London stocks nudged lower in early trade on Wednesday, taking their cue from Wall Street as investors eyed key UK jobs data, although earnings from Lloyds and Glencore were a bright spot.
At 0825 GMT, the FTSE 100 was down 0.1% to 7,237.34, while the pound was flat against the euro at 1.1341 and down 0.1% versus the dollar at 1.3976.
UK average earnings, the claimant count and the ILO unemployment rate are due at 0930 GMT, while Bank of England governor Mark Carney is set to make a speech at 1415 GMT. In the US, the latest FOMC minutes are out at 1900 GMT.
London Capital Group analyst Jasper Lawler said: "Expectations are for earnings growth to remain constant in the three months to December at 2.5%. Given that inflation is elevated at 3%, wage growth data takes on an even more important role in the eyes of the market. As inflation moved higher following the weakening of the pound, post Brexit referendum, wage growth hasn't kept pace. This means that wages have actually been falling in real terms, squeezing the UK consumer, which in turn is leading to a slowdown in spending.
"Negative real earnings growth is a key factor as to why the BoE has shown caution over raising interest rates. Hiking too quickly can actually dampen wage growth further, the opposite effect of what the central bank is looking for. Therefor investors will be watching the figures carefully to see whether the squeeze on the consumer is increasing or receding."
Jasper said that should wages surprise on the upside, the possibility of the BoE raising rates in spring - which currently stands at 65% - will increase. This would support GBP/USD and send it back over $1.40 towards resistance at $1.4025.
In corporate news, Lloyds Banking Group rose despite missing expectations on full-year profit, as it announced a £1bn share buyback and increased its annual dividend by a fifth.
Housebuilder Barratt Developments was also in the black as it posted a record first-half profit thanks to strong demand, while Glencore gained after it declared a $2.9bn dividend to be paid out in two equal instalments in 2018 as profits surged higher and it looked confidently to the future.
On the downside, roadside assistance company AA tanked after warning on profits and slashing its dividend as it swerved down a new strategic route.
Metro Bank lost ground even as it reported record results and its first annual profit, as underlying pre-tax profit of £20.8m - compared to a loss of £11.7m in 2016 - fell short of expectations of £30m.
Unite Group slipped as it launched a £170m placement to fund two near university projects and said pre-tax profit rose 14% in the year to the end of December.
Capital & Counties retreated after it said its Earls Court interests were now valued at 1bn, down from £1.1bn in 2016, and posted a drop in full-year revenues to £87.7m from £94m.
Hochschild Mining was in the red as it reported a drop in full-year earnings on the back of higher costs and increased investment in brownfield exploration, but said production is expected to double this year.
FirstGroup was under the cosh after saying annual earnings are expected to be slightly lower, while Polymetal ticked down as it signed its first offtake contract for Kyzyl concentrate.
In broker note action, BT was upgraded to 'hold' at Deutsche Bank, while 3i Infrastructure was lifted to 'buy' at Jefferies, but HSBC was cut to 'hold' by Societe Generale.
Market Movers
FTSE 100 (UKX) 7,237.34 -0.13%
FTSE 250 (MCX) 19,768.50 -0.17%
techMARK (TASX) 3,333.84 -0.13%
FTSE 100 - Risers
Barratt Developments (BDEV) 576.00p 2.45%
Lloyds Banking Group (LLOY) 68.84p 1.46%
Glencore (GLEN) 388.85p 1.16%
Reckitt Benckiser Group (RB.) 5,980.00p 0.88%
HSBC Holdings (HSBA) 743.30p 0.85%
Royal Bank of Scotland Group (RBS) 277.00p 0.76%
BT Group (BT.A) 232.52p 0.74%
Persimmon (PSN) 2,480.00p 0.61%
National Grid (NG.) 752.20p 0.56%
Taylor Wimpey (TW.) 191.95p 0.47%
FTSE 100 - Fallers
Shire Plc (SHP) 3,019.00p -1.74%
WPP (WPP) 1,378.00p -1.57%
Halma (HLMA) 1,206.00p -0.99%
Randgold Resources Ltd. (RRS) 6,096.00p -0.88%
BAE Systems (BA.) 590.93p -0.82%
British American Tobacco (BATS) 4,458.50p -0.77%
BHP Billiton (BLT) 1,480.20p -0.68%
Rio Tinto (RIO) 3,963.50p -0.68%
GlaxoSmithKline (GSK) 1,316.40p -0.65%
Ferguson (FERG) 5,204.00p -0.61%
FTSE 250 - Risers
Fidessa Group (FDSA) 3,640.00p 1.96%
3i Infrastructure (3IN) 200.99p 1.82%
Stobart Group Ltd. (STOB) 257.87p 1.13%
Euromoney Institutional Investor (ERM) 1,232.00p 0.98%
Bellway (BWY) 3,158.52p 0.98%
Barr (A.G.) (BAG) 638.75p 0.91%
RHI Magnesita N.V. (DI) (RHIM) 4,295.00p 0.82%
Hastings Group Holdings (HSTG) 295.60p 0.82%
Vectura Group (VEC) 77.96p 0.66%
Softcat (SCT) 578.76p 0.65%
FTSE 250 - Fallers
Dunelm Group (DNLM) 563.50p -2.59%
Weir Group (WEIR) 1,995.00p -2.01%
Rotork (ROR) 287.40p -1.41%
Metro Bank (MTRO) 3,560.00p -1.39%
SIG (SHI) 149.90p -1.19%
Capital & Counties Properties (CAPC) 275.80p -1.11%
Petrofac Ltd. (PFC) 423.69p -1.01%
Balfour Beatty (BBY) 273.20p -0.94%
Cineworld Group (CINE) 243.60p -0.90%
Wood Group (John) (WG.) 622.00p -0.89%