UK Stocks Gain as Weaker Labour Market Lessens Chances of Rate Hike
Market Reaction to Labour Data and Rate Hike Expectations
May 19 (Reuters) - UK equities rose on Tuesday after data pointed to a softer labour market that eased worries of an immediate rate hike.
The blue-chip FTSE 100 index rose 0.61% as of 11:13 am GMT, while the midcap FTSE 250 climbed 0.81%.
Labour Market Data and Economic Outlook
• Data from the tax office showed that April payrolls fell 100,000 from March, while the unemployment rate ticked up to 5% for the first quarter, from 4.9% in the three months to February.
Expert Commentary
• "Today's labour market report will not just make for an uncomfortable reading, it will likely stop the MPC (Bank of England's Monetary Policy Committee) in its tracks," said Sanjay Raja, chief UK economist at Deutsche Bank.
Rate Hike Probabilities
• Traders expect a 29.1% chance of a rate hike at the June meeting, according to data compiled by LSEG.
• "We're still forecasting a rate hike in June, but that is far from guaranteed," said James Smith, ING's developed markets economist, UK.
Political and Sectoral Developments
Political Climate
• The reprieve in equities gave investors breathing room after a period marked by elevated political uncertainty.
• On Monday, Prime Minister Keir Starmer reiterated that he would remain at the helm, but several of his Labour Party's lawmakers have called for him to quit.
Sector Performance
• Investment banking shares rose 2.58%, while retailers advanced 2.49%.
Notable Movers
• IG Group rose 10.22%, the biggest gainer on the FTSE 100, after it raised its annual and medium-term revenue forecasts for the second time this year.
(Reporting by Niket Nishant in Bengaluru; Editing by Vijay Kishore)
