FTSE 100 Live: Stocks open flat as market awaits signals on Iran-US talks Proactive uses images sourced from Shutterstock
It’s a flat start for the FTSE 100 so far, up four points to 10,613 so far.
Top of the risers is SSE, up 2.9% after the government confirmed plans to move older wind and solar farms onto fixed-price contracts.
British Land is next, up 2.2% as it nudged up its outlook after a solid year. Land Sec has been dragged up too.
Centrica, Compass, Experian, RELX and Bunzl are among the other top risers, climbing 1.8%-1%.
AB Foods is down 4.2% after confirming its plan to split in two.
Other fallers include housebuilders Barratt Redrow and Persimmon, and drugmakers GSK and AstraZeneca, all down over 1%.
Data from the Office for National Statistics this morning shows the labour market was “not loosening as much as feared in the months leading up to the Iran war”, says economist Rob Wood at Pantheon Macroeconomics.
This “will limit the number of MPC rate cuts that are possible if oil prices fall back, and tip the balance towards rate hikes if oil prices stay high”.
Overall data was mixed, he says, with wage growth slowing, payrolls falling, but unemployment dropping. “But the takeaway is a hawkish one in our view.”
Wood says payrolls data is “likely” to be revised to be nearly flat in March, “a decent result given the war”, while private wage growth was as expected.
“The big surprise was a drop in unemployment, which the MPC had turned their focus to in February.”
Associated British Foods will split its business in two, confirming plans to demerge its Primark retail arm from its food operations.
Following a strategic review launched in November, the FTSE 100 group said shareholders will receive stakes in both separately listed companies, with Primark and the remaining food business, to be known as FoodCo, expected to also join London’s blue-chip index.
The demerger is targeted for completion before the end of 2027, subject to approvals, and will be carried out via a dividend distribution to shareholders.
Uncertainty remains over what will happen when the two-week ceasefire agreement comes to an end on Wednesday evening, Washington time, says market analyst Ipek Ozkardeskaya at Swissquote.
With futures back in positive territory this morning on hopes that the US and Iran will reach an agreement before the Wednesday deadline, she says thsi would match pattern seen for much of the past two months
“Tensions rise over the weekend, markets sell off on Monday, hesitate on Tuesday, sentiment improves on optimistic – but not necessarily substantiated – announcements from the US, markets rally into Friday, and the weekend brings fresh bad news.”
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But why are oil prices seeping lower when the Strait of Hormuz remains closed and prolonged disruptions are expected to constrain energy supply for months?
Ozkardeskaya notes that Kuwait Petroleum Corp declared force majeure yesterday on crude and refined product shipments, saying it won’t be able to meet full obligations due to circumstances beyond its control.
She says it would “take years” and sustainably higher oil prices compared to pre-war levels for other producers like Brazil, Guyana, Suriname and Venezuela to help fill the gap.
“So why the pullback? Is it just hope? The answer is likely no. Hope plays a role, but other factors are at work.
“First, releases from strategic reserves may have temporarily supported supply, though these buffers are diminishing.
“But more importantly, demand destruction is already underway. Reports suggest European refineries, for example, have reduced demand due to higher input costs – putting downward pressure on prices.”
Oil prices “cannot rise indefinitely,” she says, “as higher prices ultimately curb demand.”
The UK unemployment rate fell to 4.9% in February from 5.2% in January, the Office for National Statistics reveals, below the consensus forecast of 5.2%.
Average weekly earnings excluding bonuses grew 3.6% in the three months to February compared to a year ago, down from 3.8% in January and above the consensus estimate of 3.5%.
Private sector ex-bonus pay rose 3.2%, down from January’s 3.3% gain and in line with the 3.2% consensus.
“The number of workers on payroll remained broadly flat in recent periods, reflecting ongoing weak hiring,” says Liz McKeown, ONS director of economic statistics.
“Vacancies fell to their lowest level in almost five years, but with unemployment also falling the number of vacancies per unemployed person remains broadly unchanged.
“Alongside falling unemployment, the number of people not actively seeking work increased, with data suggesting fewer students seeking work alongside their studies.
“Regular wage growth has slowed further with growth at its lowest rate in over five years.”
The FTSE 100 and other European stock benchmarks look set to bounce back on Tuesday as hope grows that Iran will join the US in Pakistan for peace talks.
There has been no confirmation that Iran will take part in talks before Wednesday, when the current ceasefire agreement ends.
Reports have variously revealed an official saying Iran is considering attending the negotiations, the foreign ministry saying no decision had been made and the parliamentary speaker saying Iran is ready for negotiations but not under terms imposed by the US.
Oil prices have been on a slight downward trend since rebounding at the start of the week. Brent crude is down 1% at $94.62 a barrel.
Ahead of the open, London’s blue-chip index has been called 10 points higher, which would chip away at some of the losses from the previous day, when it fell almost 59 points to 10,609.08.
US stocks pulled back overnight, with the Nasdaq slipping 0.3%, the S&P 500 softening 0.2% and the Dow Jones just below flat.
Asian stocks are mostly positive this morning, with Japan’s NIkkei up 0.9% and India’s Sensex climbing 0.7%, but the Shanghai Composite down 0.1%.
UK jobs data is out this morning, showing the headline unemployment rate fell to 4.9% in February, from 5.2% in January, below the consensus forecast of 5.2%. More on that shortly.