London midday: Stocks maintain gains amid rate cut hopes

(Sharecast News) - London stocks were still higher by midday on Tuesday as data showed the UK jobless rate hit its highest level in September since the pandemic while wage growth eased, raising hopes of a rate cut next month.

The FTSE 100 was up 0.8% at 9,864.42, while the pound was down 0.2% against the dollar at 1.3144.

Figures from the Office for National Statistics revealed further signs of weakening in the labour market after the unemployment rate ticked higher.

Employment softened by 0.2 percentage points in the three months to September, while the unemployment rate rose 0.3pp to 5.0%, marginally ahead of forecasts for 4.9%. The unemployment rate now stands at a post-pandemic high.

Average earnings rose by 4.6%, or by 4.8% once bonuses were included.

Driving the growth was the public sector, where earnings rose by 6,6%. In the private sector, earnings increased by 4.2%.

Liz McKeown, director of economic statistics at the ONS, said: "Taken together, these figures point to a weakening labour market.

"The number of people on payroll is now falling, with revised tax data now showing falls in most of the 12 months.

"Meanwhile, the unemployment rate is up to a post-pandemic high. The number of job vacancies, however, remains broadly unchanged."

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "The FTSE 100 has opened with a spring in its step, as cooling wage growth fuels hopes the Bank of England will cut rates in December.

"Private sector pay, a key metric for the committee, slowed to 4.2% in September, while broader wages undershot forecasts. Labour market signals are softening across the board, with payrolls falling again in October and unemployment nudging higher.

"Markets are now pricing in a 73% chance of a December rate cut, as the case for policy easing gains traction."

Investors were also mulling the latest food price data from Worldpanel by Numerator, formerly Kantar, which showed that inflation slowed to 4.7% in the four weeks to 2 November, from 5.2% a month previously.

In equity markets, WPP was the top gainer on the FTSE 100, with traders pointing to news the advertising giant has engaged McKinsey & Company to advise on a comprehensive strategy overhaul.

Vodafone rallied as it said it expects annual profit and cash flow to be at the upper end of expectations after reporting a jump in adjusted earnings and also unveiled a new progressive dividend policy with a 2.5% increase for the full year.

Informa was a high riser as it reiterated its full-year outlook on the back of ongoing strong trading.

4imprint rose sharply after saying it expects full-year revenue at the high end of the current analyst forecast range and pre-tax profit above the upper end of the range.

Oxford Instruments surged after saying it was recovering following significant macroeconomic disruption in the first quarter, with order momentum improving in Q2 and that it expects to deliver an improved performance in the rest of the year.

Hilton Food tanked as it downgraded its full-year profit guidance and struck a downbeat tone on the outlook for trading in 2026. It pointed to subdued demand and operational disruption at its Foppen smoked salmon business in Europe.

Emerging markets asset manager Ashmore was knocked lower by a downgrade to 'sell' from 'hold' at Deutsche Bank, which cut the price target to 130p from 140p.

Croda was also weaker after a downgrade to 'hold' from 'buy' at Jefferies, which cut the price target to 3,000p from 3,100p.