FTSE 100 edges higher as unemployment rate falls to 4.8%, but Vodafone drops sharply

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  • FTSE 100 adds 31 points
  • UK jobless figures improve
  • Vodafone under pressure

9.16am: Company results prove a drag

It may be a brighter start for leading shares but a couple of companies reporting results are missing out on the rally.

Vodafone PLC (LON:VOD) has dropped sharply, down 6.87% or 9.74p to 131.96p after it missed expectations for full year earnings.

It reported earnings of €14.4bn compared to forecasts of €14.54bn as revenues from roaming and handset sales were hit by a slowdown caused by the pandemic.

But it expected this to improve in the current year to €15bn to €15.4bn and it has cut net debt to €40.5bn from €42bn, partly helped proceeds of €2bn from the flotation of its infrastructure business Vantage Towers,

Richard Hunter, head of markets at interactive investor, commented “These are not results to shoot the lights out, but there are signs of measured progress within an extremely competitive sector…

“There is certainly much to do for Vodafone, particularly in a notoriously competitive sector which can often simply come down to price in the mind of the consumer. The pandemic has had its own effect on revenues also, with an inevitable decline in visitor and roaming revenues, while handset sales have also suffered.”

Land Securities PLC (LON:LAND) is also on the way down, falling 0.62% or 4.4p to 710.6p. 

The property group reported an annual loss of £1.39bn, up from a loss of £837mln the previous year, with its office portfolio suffering from the growth of working at home during the pandemic. It is planning to sell its retail parks, another struggling sector.

UBS analysts said the results were broadly as expected and added “Despite a 43% rally over the past 12 months, the stock still stands at a 27% discount and offers some value.”

Overall  the FTSE 100 is holding on to much of its early gains, up 31.78 points or 0.45% at 7064.63.

8.27am: Commodity companies among early risers

With metal prices continuing to gain ground amid talk of supply shortages and growing demand, mining companies are among the big gainers so far.

BHP PLC (LON:BHP) is up 3.14% or 70.5p to 2316.5p while Anglo American PLC (LON:AAL) has added 2.71% or 89.5p to 3387p and Glencore PLC (LON:GLEN) is 2.28% or 7.4p better at 332.55p.

8.18am: Signs of improvement in jobs market

The UK unemployment rate improved in the first quarter of the year as the economy continued to show signs of recovering from the worst of the pandemic.

It fell to 4.8% in January-March compared to 4.9% the previous quarter, while the employment rate increased for the first time since before the virus hit, edging up 0.2 percentage points to 75.2%.

There was also an increase in the number of people on company payrolls in April, up 97,000 compared with March.

But there is still a way to go.

Institute for Employment Studies director Tony Wilson said: “Today’s figures confirm that the labour market is turning the corner – with a sharp rise in employee jobs in April as the economy reopened, vacancies rising and unemployment now clearly trending down.

“However you don’t have to look too far to see the lasting damage caused by a year of lockdowns and disruption.  Long-term unemployment rose by more than a quarter in the last year, its fastest rate of growth since the 2010 crisis.  Older people in particular are now starting to see sharp rises, with long-term unemployment reaching its highest in five years.  With many firms reporting difficulties in filling jobs as the economy reopens, government and employers will need to do more to bring the long-term unemployed back into work and help avoid this crisis leading to lasting scars.”

Jack Kennedy, UK economist at the global job site Indeed, said: “The number of people on employer payrolls has clawed its way to 190,000 above the nadir it endured during the first lockdown last year. Despite this progress, it’s still a shadow of its pre-pandemic self – and it remains 772,000 down on the pre-Covid number.

“At the same time the headline rate of unemployment has fallen, and while this progress is impressive, it’s not just a case of all those unemployed people suddenly moving into paid work. The reality is many of those formerly unemployed people stopped looking for work during the third lockdown, meaning they disappeared from the official jobseeker total.

“Nevertheless an unemployment rate of 4.8% is a step in the right direction, and there is a growing sense of momentum in the labour market.”

Still, the FTSE 100 has welcomed the news, adding 48.5 points or 0.69% in early trading.

6.42am: Leading shares set to show strong start

The FTSE 100 has been tipped to make a sprightly start on Tuesday after markets got off to a lacklustre start to the week.  

London’s blue chip index will rise around 53-60 points, according to the spread-betting platforms, a day after closing down 11 points at 7,033.

Wall Street had a day in red, with the tech-heavy Nasdaq leading the decline, down 0.4%, but all three major indices finishing off their lows, with the Dow Jones losing 0.2% and the S&P 500 falling 0.25%.

Asia is setting the fashion for green on Tuesday with strong rises almost across the board.

In the UK, a big focus is going to be on the latest UK unemployment numbers.

Last time out we saw February’s ILO unemployment improved to 4.9%, having been up at 5.1% in December, while March’s monthly jobless claims numbers fell to 7.3%.

“While the outlook for unemployment appears more positive as we head into the summer months, that doesn’t mean it can’t go higher, as we head towards the end of the year and the furlough program starts to get withdrawn,” said analyst Michael Hewson at CMC Markets.

“Even in a best case scenario a lot of jobs that were around over a year ago, may still not come back, though a lot of them may well be replaced by different ones.”

The Bank of England, as Hewson noted, is forecasting unemployment to increase later this year to 5.2% before falling to 4.7% in the second quarter of 2022.

“There is still a lot that can still go wrong,” Hewson adds, “with the government being uncharacteristically cautious, about the lifting of all restrictions just over a month from now. With the Indian variant threatening to increase, the June deadline could still slip.”

In company news, Cranswick (LON:CWK), Imperial Brands (LON:IMB), Land Securities (LON:LAND) and Vodafone (LON:VOD) are likely to be among the main points of interest with results out shortly.  

Around the markets

  • Pound – up 0.2% to US$1.4172
  • Oil – up 0.4% to US$69.72
  • Gold – flat at US$1,869.77
  • Bitcoin – up 6.3% (over 24 hrs) to US$45,456.4

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were higher on Tuesday even as Japan’s economy shrank at an annualised rate of 5.1% in the January to March period, as per government data.

The Hang Seng index in Hong Kong gained 1.27% while the Shanghai Composite in China rose 0.15%.

In Japan, the Nikkei 225 surged 2.35% and South Korea’s Kospi jumped 1.31%.

Shares in Australia lifted, with the S&P/ASX 200 trading 0.74% higher.

Proactive Australia news:

Silver Mines Ltd (ASX:SVL) (OTCMKTS:SLVMF) has substantially expanded drilling activity at its Bowdens Silver Project in New South Wales off the back of a recent successful drilling program which identified new silver feeder veins.

Creso Pharma Ltd (ASX:CPH) (FRA:1X8) has finalised the development of anibidiol® swine, a new and innovative hemp flour and oat bran based complementary feed product to support stress reduction and wellbeing of pigs reared indoors and outdoors.

Brookside Energy Ltd (ASX:BRK) (OTCMKTS:RDFEF) (FRA:8F3) is progressing drilling of the high-impact Jewell 13-12-1S-3W SXH1 well in the SWISH Area of Interest (AOI) in the world-class Anadarko Basin.

AVZ Minerals Ltd (ASX:AVZ) (OTCMKTS:AZZVF) (FRA:3A2) has revealed its initial exploration target at the Manono Project in the Democratic Republic of Congo, defining the potential for alluvial hosted tin resources based on an independent review of historical exploration records produced by Zaïretain – the previous operators of the project.

Northern Minerals Ltd (ASX:NTU) (OTCMKTS:NOURF) (FRA:NUN) plans to restart the second phase drilling campaign at Browns Range in the first week of June, following the end of wet season.

Imugene Ltd (ASX:IMU) (OTCMKTS:IUGNF) and City of Hope®, a world-renowned independent cancer research and treatment centre near Los Angeles, have entered into a licensing agreement for the patents covering a novel combination immunotherapy.

Antipa Minerals Ltd (ASX:AZY) has completed a strongly supported and oversubscribed share purchase plan raising A$3 million and resulting in the company receiving applications totalling A$5 million at the issue price of A$0.042 per share.

CardieX Ltd (ASX:CDX) is on track for profitability with current initiatives such as an expanded sales and marketing focus, new partnerships, product hires and executive hires contributing to sales growth and a 40% increase in forecast revenues for FY2021.

K2fly Ltd (ASX:K2F) welcomes the decision of Fortescue Metals Group Limited (ASX:FMG) to extend the term of its Infoscope Land Management software licence for a further three years for Pilbara operations.

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