London stocks closed in negative territory on Thursday, as investors digested the latest UK jobs data, with energy shares under the cosh amid expectations of rising supply.
The FTSE 100 ended the session down 1.12% at 7,012.02, and the FTSE 250 was off 1.09% at 22,501.25.
Sterling was once again mixed, last trading 0.02% weaker against the dollar at $1.3857, but strengthening 0.2% on the euro to €1.1732.
“It’s been another negative day for European markets, as they continue to trade in the range they’ve broadly been in for the past few months,” said CMC Markets chief market analyst Michael Hewson.
“The energy sector is acting as the largest drag, with BP and Royal Dutch Shell lower on weaker oil prices, dragging the FTSE 100 back towards the 7,000 level.
“The travel and leisure sector is continuing to leak losses with easyJet and IAG both trading at their lowest levels since February, while Jet2 has hit another nine-month low, as uncertainty over travel rules and restrictions continues.”
On the macro front, figures released earlier by the Office for National Statistics showed the number of employees on UK payrolls rose by 356,000 in June, as the labour market continued to recover from the worst of the pandemic.
The increase took the total of payroll employees to 28.9 million, but the figure remained 206,000 less than before the crisis, with many jobs preserved by government support.
It said the unemployment rate edged down 0.2 percentage points to 4.8%, and the redundancy rate fell to pre-pandemic levels.
From April to June there were 862,000 vacancies – 77,500 more than the pre-crisis level in the first three months of 2020.
“The labour market is continuing to recover, with the number of employees on payroll up again strongly in June,” said ONS director of economic statistics Darren Morgan.
“However it is still over 200,000 down on pre-pandemic levels, while a large number of workers remain on furlough.”
Morgan said the number of job vacancies continued to rise “very” strongly.
“The biggest sector driving this was hospitality, followed by wholesaling and retailing.”
Investors were also met with a warning from Michael Saunders, an external member of the Bank of England’s monetary policy committee, who said that with the economy reviving and inflation above the committee’s 2% target, it may need to end its bond-buying programme in the coming months, rather than in December, and increase borrowing costs in 2022.
The BoE cut interest rates to a record low of 0.1% at the start of the pandemic, and had not increased them since amid economic uncertainty.
It also stepped up its bond-buying programme to support the economy.
In a speech, Saunders said there was now clear evidence that output had regained most of its ground and that core inflation was no longer below target.
The annual rate of inflation rose to 2.5% in May from 2.1% a month earlier, beating economists’ forecasts.
“If activity and inflation indicators remain in line with recent trends and downside risks to growth and inflation do not rise significantly – and these conditions are important – then it may become appropriate fairly soon to withdraw some of the current monetary stimulus in order to return inflation to the 2% target on a sustained basis,” Saunders said.
In equity markets, Shell and BP gushed lower, losing 2.27% and 2.85% respectively, as oil prices fell amid expectations of more supply after a truce between Saudi Arabia and the United Arab Emirates.
Just Eat Takeaway slumped 9.11% even after it said losses had peaked, and that it expected to move back into profit after orders increased by more than half in the first six months of 2021.
“A 733% gain in UK order growth just doesn’t cut it any more, it appears, and in any case matching this for the next half is likely to prove impossible, given the expected return to pubs and restaurants and the concomitant decline in takeaway orders,” said IG market analyst Chris Beauchamp.
“Having hit a lower high in June the downtrend remains firmly in place, and the stock’s performance for the period since October 2020 remains almost the complete inverse of the FTSE 100.
“Tech stocks might be back in fashion in the US, but Just Eat has yet to convince the doubters it seems.”
British Airways and Iberia parent IAG descended 3.25%, engine marker Roll-Royce lost 1.75%, budget airline easyJet was off 2.02%, and travel operator TUI was behind 2.93%, amid ongoing worries about the impact of Covid-19.
On the upside, cybersecurity firm Avast rocketed 18.13% after confirming it was in advanced talks over a merger with NortonLifeLock.
Credit-checking firm Experian rallied 2.45% after lifting its full-year expectations as it reported a 31% jump in first-quarter revenues, with all regions and segments delivering growth.
B&Q owner Kingfisher gained 1.02% after it said late on Wednesday that first-half adjusted pre-tax profit was set to be ahead of its previous expectations after better-than-anticipated second-quarter trading.
Precious metals miners Hochschild and Centamin also shone, advancing 1.53% and 2.52%, as gold prices rose.
Market Movers
FTSE 100 (UKX) 7,012.02 -1.12%
FTSE 250 (MCX) 22,501.25 -1.09%
techMARK (TASX) 4,363.91 -1.54%
FTSE 100 – Risers
Avast (AVST) 595.60p 18.13%
Experian (EXPN) 3,061.00p 2.82%
Prudential (PRU) 1,370.50p 1.97%
Polymetal International (POLY) 1,619.00p 1.16%
Spirax-Sarco Engineering (SPX) 14,405.00p 1.05%
Rio Tinto (RIO) 6,151.00p 1.03%
Kingfisher (KGF) 365.80p 0.97%
Burberry Group (BRBY) 2,070.00p 0.49%
Sainsbury (J) (SBRY) 283.90p 0.39%
Johnson Matthey (JMAT) 3,126.00p 0.26%
FTSE 100 – Fallers
Just Eat Takeaway.Com N.V. (CDI) (JET) 5,837.00p -9.11%
Next (NXT) 7,402.00p -4.98%
AstraZeneca (AZN) 8,322.00p -4.00%
Taylor Wimpey (TW.) 156.65p -3.60%
JD Sports Fashion (JD.) 892.00p -3.44%
International Consolidated Airlines Group SA (CDI) (IAG) 165.16p -3.37%
Associated British Foods (ABF) 2,019.00p -3.17%
BP (BP.) 296.05p -2.85%
Intermediate Capital Group (ICP) 2,092.00p -2.74%
Flutter Entertainment (CDI) (FLTR) 12,095.00p -2.73%
FTSE 250 – Risers
Centamin (DI) (CEY) 105.60p 2.52%
Sirius Real Estate Ltd. (SRE) 118.60p 2.42%
Avon Rubber (AVON) 2,564.00p 2.15%
Vivo Energy (VVO) 103.20p 1.98%
Dechra Pharmaceuticals (DPH) 4,758.00p 1.71%
Rathbone Brothers (RAT) 1,864.00p 1.41%
Just Group (JUST) 93.60p 1.41%
Domino’s Pizza Group (DOM) 415.80p 1.32%
Hochschild Mining (HOC) 158.50p 1.21%
TI Fluid Systems (TIFS) 303.00p 1.17%
FTSE 250 – Fallers
Cineworld Group (CINE) 57.32p -10.58%
Just Eat Takeaway.Com N.V. (CDI) (JET) 5,837.00p -9.11%
Hays (HAS) 152.80p -8.88%
Tullow Oil (TLW) 47.59p -8.76%
Ashmore Group (ASHM) 386.20p -5.80%
Marks & Spencer Group (MKS) 137.50p -5.24%
Network International Holdings (NETW) 352.00p -4.40%
Auction Technology Group (ATG) 1,226.00p -4.37%
Trustpilot Group (TRST) 377.20p -3.97%
Moonpig Group (MOON) 390.00p -3.70%
