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London midday: FTSE touch firmer after jobs data, Pill comments

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The FTSE 100 was up 0.1%, at 8,420.48.

Pill said it’s “not unreasonable” to expect an interest rate cut this summer, as data showed that tightness in the UK labour market may be easing.

Speaking at an event by the Institute of Chartered Accountants in England and Wales, Pill said: “It’s not unreasonable to believe that through the summer we will begin to see enough confidence in the decline in persistence that bank rate will come under consideration.”

While he acknowledged that there is still “some way to go” to bring inflation down to the target level, he said that a potential easing of monetary policy would still leave a restrictive stance in place. “It’s important to recognise we can cut bank rate, while still leaving some restriction in the system,” he said.

The Bank Rate has been held at a 16-year high of 5.25% since August last year, with the Monetary Policy Committee voting in favour of no change at its latest meeting last week.

However, two of the nine-member committee did vote for a cut, indicating that the mood within the central bank was starting to turn.

Pill said that Bank has made progress on bringing inflation down to the 2% target, which he expects it to reach in the second quarter, though the MPC has to evaluate two inflation releases and another labour market report before its next policy decision in June.

Data released earlier by the Office for National Statistics showed that unemployment nudged higher in March, in line with expectations, despite wages continuing to grow. The unemployment rate was 4.3% in January to March, up from 4.2% previously.

The claimant count also rose in April, by 8,900 on the month and 29,300 on the year, to 1.58m.

The number of payrolled employees fell by 5,000 between February and March, although it rose by 288,000 year-on-year.

The early estimate for payrolled employees for April decreased by 85,000 on the month. Year-on-year it nudged 0.4% higher, to 30.2m.

Job vacancies continued to decrease, meanwhile, down 26,000 on the quarter to 898,000.

The data also showed an increase in average earnings, however, despite the cooling jobs market.

The annual growth in employees’ average regular earnings, excluding bonuses, was 6% in January to March. Including bonuses, growth held steady at 5.7%. Analysts had expected it to slow to 5.5%.

Kathleen Brooks, research director at XTB, said: “The labour market data in the UK for March and April suggests that the jobs market is softening, the unemployment rate is ticking up mildly, and the claimant count rate is rising. Wage growth is remaining stubborn, but adjusted for inflation, wage growth is rising by a 1.7% annual rate, which is below the Bank of England’s 2% target rate.

“While a rate cut from the BoE next month is not a done deal and will be dependent on other data points, for example next week’s CPI, this labour market report is unlikely to stand in the way of a cut.”

In equity markets, telecoms giant Vodafone rallied after it posted slightly better annual results than forecast as it continued to offload businesses and move towards its tie-up with rival operator Three. Operating profit fell 74.6% to €3.7bn, mainly as a result of disposals in the prior financial year, in particular the €8.6bn gain on disposal of Vantage Towers.

Luxury fashion brand Burberry was a high riser ahead of preliminary results on Wednesday.

Electricals retailer Currys surged as it lifted its full-year profit expectations, hailing a return to like-for-like sales growth. Full-year pre-tax profit excluding the Greek business is now expected to be between £115m and £120m, up from previous guidance of “at least” £105m.

Online electricals retailer AO World also racked up strong gains.

Car dealership Inchcape rose as Citi opened a ‘positive catalyst watch’ on the shares, saying it “has a unique consolidation opportunity within the automotive distribution market”.

DCC slumped as its full-year revenue and adjusted earnings per share missed analysts’ forecasts.

Flutter Entertainment lost ground as it said net losses widened to $177m in the first quarter from $111m, mainly due to non-cash charges.

Bakery chain Greggs fell as it maintained full-year earnings forecasts as underlying sales grew 7.4% in the first 19 weeks of this year in what it called a “challenging market”.

Anglo American was in focus again as it announced a “major new phase” in its strategy as it makes radical changes to its business structure to drive shareholder returns and save costs, including the divestment or spin-off of its steelmaking coal, nickel, platinum and diamond operations.

On Monday, the miner said it has rejected a second, £34bn takeover offer from Australia’s BHP.

Market Movers

FTSE 100 (UKX) 8,420.48 0.07%
FTSE 250 (MCX) 20,568.48 0.04%
techMARK (TASX) 4,745.52 0.25%

FTSE 100 – Risers

Vodafone Group (VOD) 72.26p 3.26%
Burberry Group (BRBY) 1,202.50p 3.22%
BT Group (BT.A) 110.40p 1.33%
RS Group (RS1) 825.00p 1.29%
Kingfisher (KGF) 268.60p 1.24%
Severn Trent (SVT) 2,614.00p 1.20%
Airtel Africa (AAF) 119.20p 1.02%
Rightmove (RMV) 540.40p 0.97%
Auto Trader Group (AUTO) 752.40p 0.94%
SEGRO (SGRO) 883.80p 0.94%

FTSE 100 – Fallers

DCC (CDI) (DCC) 5,730.00p -2.96%
Flutter Entertainment (DI) (FLTR) 15,810.00p -2.35%
Taylor Wimpey (TW.) 141.00p -1.54%
Anglo American (AAL) 2,667.00p -1.48%
CRH (CDI) (CRH) 6,502.00p -1.16%
Persimmon (PSN) 1,397.50p -1.13%
Legal & General Group (LGEN) 243.60p -1.10%
Croda International (CRDA) 4,767.00p -1.00%
Diploma (DPLM) 4,022.00p -0.94%
B&M European Value Retail S.A. (DI) (BME) 547.20p -0.87%

FTSE 250 – Risers

Currys (CURY) 71.15p 8.88%
AO World (AO.) 108.60p 4.62%
Trustpilot Group (TRST) 216.00p 3.35%
Inchcape (INCH) 803.50p 2.68%
North Atlantic Smaller Companies Inv Trust (NAS) 4,110.00p 1.99%
Babcock International Group (BAB) 514.00p 1.98%
Apax Global Alpha Limited (APAX) 158.80p 1.79%
Bytes Technology Group (BYIT) 515.50p 1.78%
Ferrexpo (FXPO) 47.40p 1.72%
TUI AG Reg Shs (DI) (TUI) 604.00p 1.68%

FTSE 250 – Fallers

Future (FUTR) 830.00p -3.71%
CMC Markets (CMCX) 263.00p -3.31%
Marshalls (MSLH) 306.50p -2.70%
Direct Line Insurance Group (DLG) 195.00p -2.01%
Greggs (GRG) 2,764.00p -1.92%
Lancashire Holdings Limited (LRE) 621.00p -1.90%
International Distributions Services (IDS) 278.60p -1.83%
Bank of Georgia Group (BGEO) 4,885.00p -1.71%
TBC Bank Group (TBCG) 3,005.00p -1.64%
Jupiter Fund Management (JUP) 85.20p -1.62%

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