London’s FTSE indices closed higher on Tuesday, paring losses from this morning as investors mulled key economic data and the state of the UK’s banking sector.
The blue-chip FTSE 100 traded 0.2 per cent higher at 7,389.70, while the mid-cap FTSE 250 dropped 0.38 per cent to 16,994.10.
Investors weighed S&P Global’s Purchasing Managers’ Index, which showed a third straight month of contraction in October as higher borrowing costs bring the UK’s economy to the edge of a recession.
UK labour market data released by the Office for National Statistics (ONS) earlier in the morning showed lower-than-expected unemployment and suggested further loosening in the jobs market.
However, experts raised concerns over the accuracy of the data, which the agency said was “experimental” and reflected a declining response rate to its labour force survey.
“Changes to the way the numbers are crunched aside, figures out this morning from the ONS show a deteriorating picture in the UK jobs market,” said Danni Hewson, head of financial analysis at AJ Bell. “This should, in theory, reduce the pressure on the Bank of England to push interest rates higher.”
Steve Clayton, head of equity funds at Hargreaves Lansdown, said the conflict in the Middle East has raised short-term tensions in oil markets, while “the looming European winter” will test gas supplies amid Russia’s war in Ukraine.
“Gas storage capacity is largely full as winter approaches,” he added. “Encouragingly, UK gas futures for December delivery are still less than half the level at which they were trading this time last year, although they have risen in recent weeks.”
On the FTSE 100, banks were among the biggest losers, with Barclays paring losses but still closing 6.3 per cent down after lowering its UK guidance again and Natwest ending the day 3.2 per cent lower ahead of results on Friday.
Lloyds also fell 1.7 per cent as investors await its results on Wednesday.
While banks have seen bumper profits in recent years, most analysts think the tailwind from higher interest rates is coming to an end.
Outsourcing giant Bunzl closed 4.3 per cent lower after announcing two more acquisitions, bringing its total this year to 14 at a cost of more than £425m.
Meanwhile, consumer credit reporting company Experian tumbled 10.1 per cent following a weak set of results from US peer TransUnion.
The biggest winners were miner Rio Tinto, pharmaceutical firm AstraZeneca, United Utilities, Severn Trent, India-based telecoms giant Airtel and Chile-based miner Antofagasta.