Weak labour market figures today fuelled expectations of another Bank of England interest rate cut.
Sterling fell as the ONS said the UK’s unemployment rate rose to a near five-year high and annual wage growth eased more than expected.
London’s growing jobs crisis also deepened after the capital’s unemployment rate jumped to a five year high of 7.6%.
FTSE 100 Live Tuesday
- Rate cut chances increase
- Unemployment rate rises
- Debenhams £35m fundraising
Market update: FTSE 100 higher, Antofagasta shares fall on results
10:06 , Graeme EvansRate-sensitive stocks today rose in a stronger FTSE 100 after the case for fresh Bank of England policy easing was boosted by poor labour market figures.
The unemployment rate rose to 5.2% and private sector earnings growth cooled in line with the Bank’s requirements for meeting its 2% inflation target.
Capital Economics said the chances of the next quarter point rates cut being in March had increased, while it reiterated forecasts for an eventual drop to 3%.
The next test will come with tomorrow’s inflation reading, which is expected to show a decline from an annual rate of 3.4% to about 3%.
The UK’s ten-year gilt yield this morning traded at its lowest level in a month and sterling fell 0.4% to below $1.36, reflecting the outlook for interest rates to ease further from their current level of 3.75%.
The FTSE 100 index rose 0.5% or 50.68 points to 10,524.37, which is near to an intraday record.
The potential boost to mortgage affordability helped Persimmon and Barratt Redrow to rally by 2%, while other rate-sensitive stocks also improved.
They included property groups British Land and Land Securities and utilities firms Severn Trent and United Utilities after gains of about 1.5%.
Data and software businesses rebounded after their recent AI disruption sell-off as Relx rose 4% or 90p to 2264p at the top of the FTSE 100 and Experian added 48p to 2519p.
Antofagasta results presented an opportunity for investors to lock in profits following the copper miner’s recent strong run. The shares fell 3% or 117p to 3629p despite a big hike in 2025 dividend.
Raspberry Pi surges, SSP upgrade boosts shares
09:25 , Graeme EvansRaspberry Pi shares have jumped 19% at the top of the FTSE 250 index.
The maker of high-performance, low-cost general-purpose computing platforms surged 57p to 362p, having recently fallen below its June 2024 IPO price of 280p.
Travel-focused catering firm SSP was the next best stock in the FTSE 250 after UBS upgraded its recommendation to Buy with a new 245p price target.
The City bank highlighted SSP’s improving cash flow generation as among reasons for the upgrade, which helped shares rally 7% or 13.1p to 202.6p.
Applied Nutrition shares lifted 6% or 14.5p to 256p after the sports nutrition, health and wellness business said it expected a full-year performance ahead of City hopes.
Holiday Inn owner reports higher 2025 profit
09:14 , Graeme EvansHoliday Inn owner InterContinental Hotels Group today reported stronger sales and profits after opening a record 443 hotels over the past year.
The FTSE 100 group said the improved performance came despite “some turbulent trading conditions” in 2025.
IHG, which also runs the Crowne Plaza and Hotel Indigo brands, said that total revenue grew by 5% to $5.19 billion (£3.8 billion) in 2025, compared with a year earlier.
Meanwhile, operating profits rose by 15% to $1.2 billion (£880 million) for the year.
IHG shares lifted by half a percent to $145.25 following the results.
Debenhams unveils £35m fundraising plan
08:20 , Graeme EvansThe owner of Boohoo and Debenhams is planning to raise £35 million to help accelerate its turnaround plans and cut debts.
Debenhams Group, which was renamed from Boohoo last year, said it has been preparing for an equity fundraiser to give the business extra liquidity.
Co-founder Mahmud Kamani, group chief executive Dan Finley and non-executive director Iain McDonald are set to take part in the fundraise.
FTSE 100 higher, Persimmon shares up 1.5%
08:16 , Graeme EvansThe FTSE 100 index has risen by 0.3% or 29.05 points at 10,502.74 after sterling weakened on the back of today’s unemployment figures.
The opening compares with futures trading, which had been pointing to a fall of 0.2% prior to the release of the interest rate-sensitive labour market statistics.
Housebuilders Persimmon and Berkeley rose by 1.5% as the outlook for mortgage affordability benefited from hopes of a March rate cut by the Bank of England.
Other risers included Relx and GSK after gains of 61p to 2235p and 40p to 2224p respectively.
Antofagasta shares fell 3%, down 120p to 3626p, following the release of the miner’s annual results. The decline came despite the copper miner’s decision to more than double its dividend for 2025.
Anglo American and Fresnillo shares also fell amid weakness across the sector.
London unemployment rate up to 7.6%
07:44 , Graeme EvansLondon’s unemployment rate has jumped to a five year high of 7.6%, today’s official figures showed.
The jobless tally is by far the worst of any region in the country and compares with a UK average of 5.2%. It means 383,000 people in London are currently jobless and actively looking for work.
The rate is the worst since the 7.8% recorded in January 2021 in the depths of the pandemic and before that the 7.7% in the February to April quarter of 2014.
Interest rate cut outlook boosted by weaker wage growth
07:31 , Graeme EvansSterling has fallen 0.4% versus the dollar at $1.3571, having been broadly unchanged prior to the release of today’s labour market figures.
The decline reflected City expectations for further interest rate cuts as the looser labour market continues to put downward pressure on wage growth.
The three-month annual growth rate of average earnings has slowed from 5.9% a year ago to 4.2% in December, down from 4.6% in November.
Excluding bonuses, private sector earnings growth fell from 3.6% to 3.4%. This figure was 6.2% a year ago but is now close to the rate of 3.25% that the Bank of England considers consistent with its 2% inflation target.
Capital Economics said: “The lack of green shoots of recovery in the labour market and further fall in wage growth supports the idea that the Bank of England has at least a couple more interest rate cuts in its locker, with the chances of the next cut happening in March rather than April edging higher.”
Unemployment rate rises to 5.2%, wage growth slows
07:20 , Graeme EvansThe UK’s unemployment rate today rose to its highest level in nearly five years at 5.2%. The October to December figure compared with City forecasts for an unchanged 5.1%.
The rate of average earnings growth including bonuses fell by more than expected to 4.2%, having been 4.6% in the previous three month period.
Sterling fell sharply and FTSE 100 futures rallied after the figures raised expectations for further interest rate cuts by the Bank of England.
The ONS said that its estimate for payrolled employees fell by 121,000 or 0.4% between December 2024 and December 2025, and decreased by 6,000 between November and December.
Liz McKeown, ONS Director of Economic Statistics, said: “The number of workers on payroll fell further in the final quarter of the year, reflecting weak hiring activity, although it is largely unchanged in the latest month.
“Over the same period the unemployment rate increased, with data showing that more people who were out of work are now actively looking for a job.
McKeown said the number of vacancies has remained broadly stable since the middle of last year.
Alongside rising unemployment this means that the number of unemployed people per vacancy has increased, reaching a new post-pandemic high. Meanwhile, redundancies are also showing an upward trend.
Meanwhile, private sector wage growth continues to slow and is at its lowest rate in five years.
McKeown added: “Public sector pay growth also slowed in the latest period but remains elevated, still affected by some pay awards being implemented earlier in 2025 than 2024, although this effect has now started to diminish.”
Annual earnings growth in real terms adjusted for inflation was 0.5% for both regular pay and total pay in the October to December period.
Unemployment rate at five-year high, pay growth slows
07:13 , Graeme EvansThe UK’s unemployment rate today rose to its highest level in nearly five years at 5.2%. December’s figure compared with City forecasts for an unchanged 5.1%.
The rate of average earnings growth including bonuses fell by more than expected to 4.2%, having been 4.6% in the previous three month period.
Sterling fell sharply and FTSE 100 futures rallied after the figures raised expectations for further interest rate cuts by the Bank of England.
Liz McKeown, ONS Director of Economic Statistics, said: “The number of workers on payroll fell further in the final quarter of the year, reflecting weak hiring activity, although it is largely unchanged in the latest month.
“Over the same period the unemployment rate increased, with data showing that more people who were out of work are now actively looking for a job.
McKeown said the number of vacancies has remained broadly stable since the middle of last year.
Alongside rising unemployment this means that the number of unemployed people per vacancy has increased, reaching a new post-pandemic high. Meanwhile, redundancies are also showing an upward trend.
Meanwhile, private sector wage growth continues to slow and is at its lowest rate in five years.
McKeown added: “Public sector pay growth also slowed in the latest period but remains elevated, still affected by some pay awards being implemented earlier in 2025 than 2024, although this effect has now started to diminish.”
FTSE 100 seen lower, US markets set for negative start
06:58 , Graeme EvansWall Street markets are set for a weaker start later today as trading resumes following the Presidents’ Day holiday.
The negative US outlook means the FTSE 100 index is seen broadly flat, having closed up 27.34 points to 10,473.69 on Monday.
NatWest shares rebounded 5%, while BAE Systems and Babcock International rose by more than 3% after Keir Starmer said Britain must “go faster” on defence spending.
The Nikkei 225 fell 0.4% this morning, while the S&P 500 index is seen opening 0.4% lower and the Nasdaq 100 down by about 0.7%.
Gold is 1.6% cheaper at $4910 an ounce and Brent Crude down 0.7% at $68.23 a barrel.
