Key Points
- UK stocks, including the FTSE 100, fell on Tuesday. The UK unemployment rate rose to 5.1%, a post-pandemic high.
- The pound strengthened against the dollar as the weak jobs data increased the likelihood of an interest rate cut.
- Despite the jobs report, a separate survey showed UK business activity picked up in December.
- Rolls-Royce announced a new £200 million share buyback program.
British stocks fell on Tuesday after new data showed the UK unemployment rate had risen to its highest level since the pandemic began. The news sent the pound higher against the dollar as traders bet on an upcoming interest rate cut from the Bank of England.
The main FTSE 100 index dropped 0.4% or 46.30 to 9,705.01, joining a broader downturn across European markets. The latest numbers from the Office for National Statistics showed the unemployment rate climbed to 5.1% in the three months to October. At the same time, wage growth slowed, adding to the signs of a cooling economy and strengthening the case for the Bank of England to cut rates later this week.
Despite the gloomy jobs data, there were some signs of life in the economy. A separate report showed that UK business activity actually picked up in December, hitting a two-month high, though it remained subdued compared to long-term trends.
In company news, there were several major announcements. Engineering giant Rolls-Royce said it plans a new £200 million share buyback program, a sign of confidence in its future performance. Another engineering firm, Goodwin, reported a huge jump in its profits.
Elsewhere, energy company Serica Energy announced a deal to buy a portfolio of assets in the North Sea for £57 million. Trading firm IG Group reported a significant increase in revenue and extended its share buyback program.
