London midday: FTSE, sterling fall as UK jobs data raises rate cut expectations

(Sharecast News) - London stocks were still weaker by midday on Tuesday, while sterling tumbled as a slowdown in UK wage growth raised expectations of a rate cut.

The FTSE 100 was down 0.4% at 9,402.12, while the pound was 0.5% lower against the dollar at 1.3264.

Figures released earlier by the Office for National Statistics showed that unemployment ticked higher in August, official statistics showed on Tuesday, by slightly more than expected, while private sector wage growth softened.

The unemployment rate was 4.8% in June to August. That was up on both July's rate of 4.7%, and ahead of consensus, also for 4.7%.

In the three months to September, vacancies fell by 9,000 - or 1.3% - to 717,000.

Average employee earnings (excluding bonuses), meanwhile, rose by 4.7%, down on growth of 4.8% a month previously.

Including bonuses, wages rose by 5%, up from July's 4.8% increase.

Wage growth across the private sector slowed to its lowest rate in nearly four years, at 4.4%, the ONS noted.

In contrast, in the public sector wages jumped 6.0%, after some pay rises were awarded earlier than they were last year.

Liz McKeown, director of economic statistics at the ONS, said: "After a long period of weak hiring activity, there are signs that the falls we have seen in both payroll numbers and vacancies are now levelling off.

"We see different patterns across the age ranges, with record numbers of over 65s in work, while the increase in unemployment was driven mostly by younger people."

Kathleen Brooks, research director at XTB, said: "The economic data suggests two things: 1, that the UK's labour market continues to soften, and the unemployment rate is creeping up, and 2, that retail sales could also come under pressure down the line.

"This has led to a small recalibration of UK interest rate cuts, the market now expects more than one cut by March 2026, and there has been a 3bp drop in where the market expects 2025 UK interest rates to end the year at 3.86%.

"Overall, we expect the Bank of England to remain concerned about rate cuts when wage growth remains well above 4%, which could limit the downside for UK Gilt yields."

The trade spat between the US and China was also still very much in focus after US Treasury Secretary Scott Bessent suggested in an interview with the Financial Times that China wants to slow the world's economy with controls on exports of rare earth materials.

"This is a sign of how weak their economy is, and they want to pull everybody else down with them," he said. "Maybe there is some Leninist business model where hurting your customers is a good idea, but they are the largest supplier to the world.

"If they want to slow down the global economy, they will be hurt the most."

Looking ahead to the rest of the day, attention will turn to earnings across the Pond, with JP Morgan, Goldman Sachs, Citi, Wells Fargo and Blackrock all slated to report.

Brooks said: "The investor focus on these earnings reports could be even more intense than usual since they could fill some of the information vacuum that has been caused by the delayed release of key economic data releases due to the US government shutdown."

In equity markets, heavily-weighted miners were the worst performers as copper prices felll, with Anglo American, Antofagasta and Glencore all lower.

also fell as it guided to higher third-quarter production but flagged a weaker oil trading result and lower gas prices.

Bytes Technology slumped as it said interim operating profit fell 7% in a "challenging economic climate".

Morgan Advanced Materials tumbled as it warned full-year sales would be around 4% lower than the prior year as demand in semiconductor markets has remained weak.

Lancashire Holdings was knocked lower by a downgrade to 'underperform' at RBC Capital Markets.

Close Brothers pared earlier losses to trade flat after increasing its motor finance redress provision to �300m following the Financial Conduct Authority's ruling on the scandal last week. The merchant bank had previously set aside �165m.

On the upside, easyJet was still the standout gainer on the FTSE 100 even after logistics firm Mediterranean Shipping Company (MSC) denied it was interested in making an investment in the budget airline. EasyJet shares surged in early trade following a report in Italy's Corriere della Sera that MSC was working with an investment fund on a possible investment in the airline.

The shares initially pared gains after MSC told Reuters it was not considering any such move, but they quickly shot higher again. "MSC denies any involvement in this matter," a spokesperson told Reuters.

Housebuilder Bellway rallied after it announced the launch of a �150m share buyback as it reported a jump in full-year profit and revenue as completions grew despite "ongoing challenges" for the industry. Peers Persimmon and Taylor Wimpey also rose.

Elsewhere, Mitie surged to the top of the FTSE 250 after lifting its full-year profit guidance.

THG was also higher as it confirmed full-year guidance after strong demand for beauty advent calendars and an improving performance Stateside boosted third-quarter numbers.

Market Movers

FTSE 100 (UKX) 9,402.12 -0.43%

FTSE 250 (MCX) 21,940.76 -0.56%

techMARK (TASX) 5,530.50 -0.61%

FTSE 100 - Risers

easyJet (EZJ) 485.10p 4.68%

Persimmon (PSN) 1,191.50p 1.97%

Berkeley Group Holdings (The) (BKG) 4,002.00p 1.88%

Land Securities Group (LAND) 610.00p 1.33%

Associated British Foods (ABF) 2,173.00p 1.21%

Centrica (CNA) 171.70p 1.15%

LondonMetric Property (LMP) 187.40p 1.13%

Barratt Redrow (BTRW) 386.10p 1.02%

Haleon (HLN) 345.30p 0.99%

National Grid (NG.) 1,105.50p 0.96%

FTSE 100 - Fallers

Metlen Energy & Metals (MTLN) 44.83p -4.27%

Anglo American (AAL) 2,899.00p -3.30%

IMI (IMI) 2,260.00p -2.93%

Spirax Group (SPX) 6,730.00p -2.81%

Rentokil Initial (RTO) 396.50p -2.65%

Antofagasta (ANTO) 2,759.00p -2.48%

International Consolidated Airlines Group SA (CDI) (IAG) 398.10p -2.47%

Ashtead Group (AHT) 5,078.00p -2.46%

Weir Group (WEIR) 2,778.00p -2.46%

Melrose Industries (MRO) 607.00p -2.35%

FTSE 250 - Risers

Mitie Group (MTO) 150.60p 8.63%

Bellway (BWY) 2,622.00p 5.81%

THG (THG) 38.56p 2.30%

Rank Group (RNK) 130.40p 2.19%

Hochschild Mining (HOC) 395.40p 2.17%

Ashmore Group (ASHM) 183.10p 1.67%

Energean (ENOG) 902.00p 1.52%

Pantheon Infrastructure (PINT) 104.50p 1.46%

British Land Company (BLND) 364.40p 1.39%

PPHE Hotel Group Ltd (PPH) 1,336.00p 1.36%

FTSE 250 - Fallers

Bytes Technology Group (BYIT) 367.20p -10.92%

Morgan Advanced Materials (MGAM) 202.00p -7.55%

Volution Group (FAN) 650.00p -4.96%

Ithaca Energy (ITH) 181.50p -3.96%

Vesuvius (VSVS) 362.60p -3.56%

TBC Bank Group (TBCG) 4,355.00p -3.44%

Lancashire Holdings Limited (LRE) 660.00p -3.37%

Lion Finance Group (BGEO) 7,690.00p -3.27%

IP Group (IPO) 56.90p -3.23%

Fidelity China Special Situations (FCSS) 315.00p -3.23%