Any lingering hopes of a pre-Christmas cut in interest rates were dashed today by figures showing an acceleration in wage growth.
The Bank of England’s concerns about a resurgence in inflation will have been stoked by the 5.2% rise in quarterly earnings.
Meanwhile, Hollywood Bowl said national insurance changes will add more than £750 a year to the average cost of employing a team member.
FTSE 100 Live Tuesday
- Wage growth dents rate cut hopes
- Hollywood Bowl flags NI impact
- Bunzl shares fall on deflation impact
Market update: Shell weighs on FTSE 100, Burberry higher in FTSE 250
10:39 , Graeme EvansThe contrast with tech-focused New York was on show again today as old economy stocks dragged the FTSE 100 index to a one-month low.
The strength of Magnificent Seven companies including Tesla and Amazon meant the S&P 500 index rose 0.4% to the brink of record territory.
The tech-focused Nasdaq Composite also jumped 1.2% to a fresh all-time high, although the poor run for the Dow Jones Industrial Average continued.
The FTSE 100 index hit a record of 8474 in May but trends since then have been disappointing, with the top flight down by 0.8% or 62.87 points to 8199.18 in today’s session.
Demand fears caused by the uncertain outlook for China’s economy meant commodity-focused stocks were among today’s heavy fallers.
Shell weakened 40.5p to 2418p, silver miner Fresnillo dropped 9.5p to 647p and Glencore fell 4.4p to 363.95p.
Other heavyweight strugglers included BAE Systems, which continued its retreat from November’s record level near 1400p by dropping 22.5p to 1174.5p.
Bunzl, which provides customers with essential not-for-sale products and services, led the fallers board after its warning that persistent levels of deflation will have a slight impact on operating profit in 2024.
The decline of 152p to 3406p came even though chief executive Frank van Zanten said it had been “another year of significant progress” and that revenues should grow next year.
Other high-profile fallers included Marks & Spencer, which dropped 8.3p to 389.3p, and BT Group after a decline of 2.85p to 146.8p.
A shortened risers board featured London Stock Exchange, which put on another 55p to 11,570p after UBS upgraded the financial data firm to Buy with a new price target of 13,500p.
The FTSE 250 index fell 158.12 points to 20,654.91, with defence products firm Chemring down 11% or 38.5p to 323p after positives in full-year results such as a record order book were offset by a weaker profit margin of 13.9%.
Results by Hollywood Bowl also signalled the end of a strong run for shares, falling 28.25p to 305.25p as it outlined the cost impact of next year’s National Insurance increases.
On the risers board, shares in the luxury goods sector fared well as Burberry rose 4% or 43.2p to 996p and Watches of Switzerland cheered 6p to 598p.
City firm backs Manchester United revival
10:02 , Graeme EvansA Buy rating on Manchester United shares has backed the former Premier League champions for an upturn in fortunes on and off the pitch.
City bank UBS initiated coverage of New York-listed Manchester United with a price target of $23. The stock closed last night at $17.68.
It sees the potential for a new management team led by co-owner Sir Jim Ratcliffe to grow annual revenues to more than £800 million by 2028. This compares with the £672 million forecast for next year.
The bank said: “Manchester United's glory days of the 1990s may be a distant memory but, with a revenue base largely unmatched by any Premier League peer, we believe Manchester United should (eventually) compete for the top spots of the Premier League and Champions League.
“The new management and its focus on cost management should support investment to improve sporting performance as well as a return to net profitability.
“With continued interest in sports teams and leagues from private equity and wealthy individuals seeing trophy assets, we see the valuation of Manchester United as well underpinned.”
FTSE 100 down 0.8% amid heavyweight pressure, Bunzl falls 5%
08:37Weaker commodity-focused stocks have put pressure on the FTSE 100 index, leaving London’s top flight 0.8% or 62.71 points lower at 8199.34.
Shell fell 44.5p to 2414p, BP lost 5.65p to 379.45p and Glencore dropped 4.7p to 363.05p.
Other weaker blue-chips included AstraZeneca after a decline of 140p to 10,384p and BAE Systems, which reversed 13.5p to 1183.5p.
Bunzl led the fallers board, dropping 5% or 176p to 3382p after its warning that deflation will have a slight impact on operating profit in 2024.
London Stock Exchange rose 70p to 11,585p after UBS upgraded the financial data firm to Buy with a new price target of 13,500p.
The FTSE 250 index fell 103.34 points to 20,709.69, with Hollywood Bowl and the defence products firm Chemring down 10% and 9% respectively following the release of their annual results.
Hollywood Bowl flags NI cost impact, revenues hit record
08:21 , Graeme EvansHollywood Bowl has warned of the “significant impact” on the hospitality industry after the Government increased employers' National Insurance contributions and threshold levels.
It estimates that the NI cost for an average UK hourly paid team member working 20 hours per week, on national living wage, has increased from just under £400 a year to £1155.
The company said it is in a better position than many to mitigate the impact of the changes, which it expects will cost it about £1.2 million on an annualised basis from April
Chief executive Stephen Burns said: “As a people-led business, our success hinges on having great people who deliver the best possible experience to our customers.
“We are working to mitigate the cost challenges presented by the Chancellor's recent budget, and our commitment to prioritising investment in attracting and retaining top talent won't change as a result of these new measures.”
Posting results for the year to 30 September, Burns said the outlook for the ten-pin bowling operator remains positive.
It is on track to grow its estate from 85 centres to 130 by 2035, with four new sites in the UK and at least two in Canada planned for the current financial year.
Revenues rose 7.1% to a record £230.4 million, while adjusted profits fell by 5.2% to £45 million. Shares dropped 11% or 36p to 297.5p in the FTSE 250 index.
Bunzl eyes another strong year, deflation has “slight impact”
08:00 , Graeme EvansDistribution and services firm Bunzl today said deflation has been more persistent than previously anticipated, leading to “a slight impact” on adjusted operating profit in 2024.
Revenue growth is expected to be about 3% higher than in 2023, at constant exchange rates, and between 0% and 1% lower at actual exchange rates.
Margin progress means operating profit for the year is set to show a strong increase in comparison with 2023 at constant exchange rates.
Despite economic and geopolitical uncertainties, the group expects robust revenue growth in 2025, at constant exchange rates. This will be driven by previously announced acquisitions and slight underlying revenue growth.
Chief executive Frank van Zanten said it had been “another year of significant progress” for the FTSE 100-listed group, which supports customers with essential not-for-sale products and services.
He added: “The group is expected to deliver a strong increase in group adjusted operating profit year-on-year, alongside a group operating margin that has expanded over recent years.”
Bunzl shares fell 5% or 178p to 3380p following the update.
Wage growth dents interest rate cut hopes
07:44 , Graeme EvansCapital Economics said an increase in regular private sector pay growth in October will heighten the Bank of England’s concerns about a resurgence in inflation.
The consultancy had expected public sector pay deals to drive up wage growth in October, but the rise in the three-month growth rate for total average earnings to 5.2% was driven mostly by an increase in the private sector.
“That said, the Bank can take some comfort from the further gradual loosening in the labour market. The reliability issues of the Labour Force Survey means that the Bank won’t read too much into the unemployment rate staying at 4.3%.
“But it will put more weight on the 35,000 decline in the PAYE measure of employment in November and the further fall in the number of job vacancies, from 828,000 in October to 818,000 in November, which is now broadly back in line with its pre-pandemic level.”
With inflation figures due tomorrow, the Bank of England is expected to keep interest rates at 4.75% when its policy meeting concludes on Thursday.
Wage growth picks up, jobless rate at 4.3%
07:18 , Graeme EvansWage growth today showed a bigger-than-expected increase, while the UK’s unemployment rate for the three months to October stayed the same at 4.3%.
Average earnings including bonuses grew by 5.2% on a year earlier, which compares with forecasts for a figure in the region of 4.6%.
Payrolled employees fell by 22,000 (0.1%) over the quarter but rose by 160,000 over the year.
The early estimate of payrolled employees for November fell by 35,000 (0.1%) on the month and increased by 76,000 (0.3%) on the year to 30.4 million.
FTSE 100 seen lower, Dow Jones extends losing run
07:00 , Graeme EvansThe Dow Jones Industrial Average last night extended its losing run to eight sessions after another mixed performance for Wall Street shares.
While the Dow lost another 0.3%, demand for tech stocks helped the S&P 500 index up by 0.4% and the Nasdaq Composite by another 1.2%.
The latest record high for the Nasdaq came amid expectations that the Federal Reserve will cut interest rates at its latest policy meeting, which is due to conclude tomorrow.
A performance more in line with the Dow Jones meant the FTSE 100 index fell 0.5% yesterday and is forecast to open today’s session down 33 points at 8229.
The pound stood at $1.2667 prior to the release of unemployment and earnings figures.
