Interactive Investor

Must read: UK jobs data, Heathrow, Raspberry Pi debut

Our head of investment rounds up the morning's big news.

11th June 2024 09:36

by Victoria Scholar from interactive investor

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GLOBAL MARKETS

European markets have opened cautiously higher with the FTSE 100 trading modestly in the green.

Hikma Pharmaceuticals (LSE:HIK) is the top gainer on the UK blue-chip index thanks to favourable broker commentary, with Citigroup raising its price target on the stock from 2770p to 2845p.

However, miners like Glencore (LSE:GLEN), Rio Tinto Registered Shares (LSE:RIO), Antofagasta (LSE:ANTO), and Anglo American (LSE:AAL) are weighing on the index following a weak session in Australia, with the ASX 200 closing down 1.33%. 

UK UNEMPLOYMENT 

The latest UK unemployment rate unexpectedly increased to 4.4% in the three months to April, up from 4.3% in the previous period, hitting the highest level since September 2021.

In a further sign of growing slack in the labour market, the number of vacancies continues to fall, hitting 904,000 between March and May, down 12,000 on the previous 3 months. There were also a record 9.43 million people classed as economically inactive during the period, with 8.3 million people unable to work due to long-term sickness, an all-time high. 

However, wage growth remains strong – regular pay including bonuses rose by 5.9% in the three months to April year-on-year, ahead of expectations for 5.7%, supported by the National Living Wage increase. While this is good news for workers, it is less good news for mortgage holders and others hoping for a near-term rate cut from the Bank of England, with persistent wage growth potentially putting upward pressure on inflation.

The central bank is unlikely to deliver its first cut to interest rates in August, with November currently the likeliest month for the start of the upcoming monetary loosening cycle. The Bank of England might also want to wait until the 4 July general election is out of the way so that it can avoid any accusations of supporting the government or a lack of independence.

HEATHROW

Heathrow achieved a record, with 81.5 million passengers choosing to travel through its airport during the 12 months to May. Last month, the airport welcomed 7.2 million passengers, the first time May traffic has ever surpassed 7 million. It is hoping that more records will be broken this summer with an estimated 30 million passengers expected.  

After the pain of the pandemic that wreaked havoc across the travel industry, Heathrow has enjoyed an impressive bounce back while simultaneously successfully navigating headwinds from the cost-of-living crisis. International travel continues to gather strength with the popular London airport benefitting from continued demand for family holidays, and weekend mini-breaks as well as an improvement in appetite for business travel post Covid.

It looks like this summer will be another strong period for Heathrow as individuals and families continue to prioritise their summer holidays over other types of discretionary spending. With the UK now out of last year’s short shallow recession, persistently strong wage growth and interest rate cuts on the horizon, there are reasons to be optimistic that international travel will continue to flourish this year.

RASPBERRY PI 

Shares in Raspberry Pi have surged on their London-listed debut. The UK budget computer company has jumped by more than 30% versus its IPO price of 280p a share that valued the business at around £540 million. That was already at the top end of its estimated pricing range. 

This is a major win not just for the company itself but for London markets more broadly which have been suffering with reputational damage since Brexit. The UK’s departure from the European Union sparked nervousness among international investors about how investable UK markets are, resulting in a Brexit discount for stocks on the FTSE 100 and FTSE 250. A growing number of companies have been mulling delisting from the London Stock Exchange including Ashtead just this week which is understood to be considering joining the mass exodus. 

However today’s news from Raspberry Pi provides a much needed optical boost to the UK markets, proving that New York isn’t the only game in town and that a business can still float successfully and enjoy strong investor demand in the UK capital. 

Chinese e-commerce giant Shein is also eyeing London for its IPO. Although not without criticism, this flotation could be another event that would help improve the allure of London as a destination for potential major public listings and its reputation as a key global financial hub post Brexit.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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