On Tuesday, UK investors adopted a cautious perspective as the blue-chip FTSE 100 index concluded the session down by 0.81%. The final interest rate decision from the Bank of England for the year is approaching, with expectations indicating it will maintain the rate at 4.75%. Market analysts are currently evaluating how the jobs data released earlier in the day will influence this decision.
"The latest UK jobs report provides yet more justification, if any were needed, for the Bank of England to keep rates on hold at its meeting this week," ING remarked in a note. "[These] numbers can be volatile, and it's hard to pin an obvious reason on the latest surge. But it will heighten suspicion among BoE hawks that wage growth is not going to readily come back down to pre-Covid levels." For October, the unemployment rate remained unchanged at 4.3%, which aligned with expectations.
In contrast, average earnings growth, including bonuses, increased by 5.2%, surpassing both estimates and the previous month's figures. Before the policy meeting, the UK government is set to issue its November consumer price index report. This report is anticipated to reveal a rise in the annual rate to 2.6% from 2.3%. In corporate news, pharmaceutical stocks GSK and Haleon led the FTSE 100 index, rising by 1.06% and 1.00%, respectively, at market close.
Conversely, Bunzl experienced the largest decline, dropping by 5.68% after the British distribution giant indicated that a longer-lasting deflation trend could impact its profits. "The stock has been subdued in relative terms since the H1s, and while this FY update marks a slight disappointment in comparison to expectations, we would not foresee an outsized negative reaction.
We still regard BNZL as a solid defensive growth story over the next 12 months," RBC Capital Markets commented in a note..