London’s FTSE 100 ticked down on Tuesday morning as investors digested new government data showing signs of continued tightness in the labour market.
The blue-chip index fell 0.14 per cent to 7,563.16, while the FTSE 250, which is more aligned with the health of the UK economy, dropped 0.38 per cent to 19,131.42.
Latest figures from the Office for National Statistics showed wage pressures eased again at the end of 2023, adding to hope that the Bank of England will start cutting interest rates in the next few months.
Annual wage growth including bonuses averaged 5.8 per cent between October and December, down from last month’s upwardly revised figure of 6.7 per cent but slightly above the 5.7 per cent expected by economists.
Excluding bonuses, the figure was 6.2 per cent, compared to the roughly 6.0 per cent predicted by experts.
The labour market more broadly remains tight, however, sending the pound up against the dollar.
According to the ONS’s latest estimates, the unemployment rate fell to 3.8 per cent, down from 3.9 per cent in the previous quarter.
The ONS cautioned that the figures should be treated with “additional caution” as the Labour Force Survey is still struggling with low response rates.
Pound strengthens on signs the labour market remains hot, while data suggests the trend continued into 2024
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said “investors assess there is still considerable way to go before stubborn inflation has been tamed”.
She added: “Inflation busting pay rises are still the norm, and there is concern that if staff costs stay high, businesses will be more reluctant to stem price increases.”
“There were buds of hope of an interest rate cut in May, but they may now be pruned back, depending what Wednesday’s CPI data reveals about broader price pressures.”
Travel giant Tui has reported a record fiscal first quarter as it urged shareholders to vote in favour of its plans to exit the London Stock Exchange in favour of Germany later today.
The company said it had booked a historic €4.3bn (£3.67bn) in revenue for the period from 1 October 2023 to 31 December 2023, amid booming travel demand following last year’s post-Covid rebound. Share rose 1.4 per cent.
Luxury carmaker Aston Martin is in talks with bankers over how to handle its £1.1bn debt pile, its executive chairman Lawrence Stroll has said.
In an interview with Bloomberg Television, Stroll said: “We are currently studying with our bankers the most appropriate actions of how to deal with it.” Shares rose 0.8 per cent.
Shares in Arm soared over 40 per cent on Monday in New York in a rally following bumper third-quarter earnings from the Cambridge-based chipmaker, which decided not to IPO in London last year.
The stock has risen nearly 100 per cent since it reported results, which would make it the third-biggest stock on the FTSE 100 if it were listed in London.
Software company Gresham Technologies has secured a contract worth $1.5m (£1.2m) for its Clareti Control platform, designed to help financial institutions control their data. Shares rose 1.3 per cent.
Consumer goods group Ultimate Products has said Brits are buying fewer airfryers than before, leading revenues to drop four per cent in the second half of the year. Shares fell 0.8 per cent.