London open: Stocks edge lower as investors mull jobs, borrowing data

21st Jul 2026 07:57

(Sharecast News) - London stocks edged lower in early trade on Tuesday as investors mulled the latest UK jobs and borrowing data ahead of Andy Burnham's first full day as prime minister, but defence names powered ahead after former Defence Secretary John Healy was appointed chancellor.

At 0835 BST, the FTSE 100 was down 0.2% at 10,503.75.

Figures released earlier by the Office for National Statistics showed the unemployment rate held steady in May, although other indicators continued to point to a softening jobs market.

The unemployment rate was 4.9% in March to May, unchanged on the previous month and marginally below forecasts for 5.0%.

However, the number of vacancies fell over the quarter - albeit by less than in recent periods - while private sector wage growth slowed

Including bonuses, total earnings rose 4.3% in March to May, or by 3.4% once the extra payments were stripped out. On an annual basis, public sector regular earnings sparked 5.5%. But in the private sector, annual wage growth slowed to 2.9%, the first time since 2020 that growth has dipped below 3%.

Liz McKeown, director of economic statistics at the ONS, said: "Vacancies fell again over the quarter, but by less than in recent periods. The latest decrease was driven mainly by smaller businesses, where labour and operating costs were cited as factors in not taking on new staff."

Separately, the ONS also confirmed that public sector net borrowing excluding public sector banks was £16bn in June, down £7.9bn on the same month a year previously and £0.3bn below the Office for Budget Responsibility forecast. The City had been anticipating a smaller decline, to £19.8bn.

The ONS attributed the reduction to higher receipts alongside slightly slower expenditure, on the back of lower inflation-linked debt interest costs. But it acknowledged: "Debt remains high by historical standards and close to the annual value of the entire UK economy."

Investors were also mulling the appointment John Healy as chancellor - a move that surprised markets as it had been widely reported that Burnham would opt for Shabana Mahmood or Ed Miliband.

Susannah Streeter, chief investment strategist at Wealth Club, said: "The Footsie has been on the back foot in early trade as investors keep an eye on Middle East tensions, a stronger pound puts pressure on some listed multinationals, and investors assess the Burnham administration's policies. A slightly more resilient snapshot of the UK labour market has lifted sterling, just as the Prime Minister unveiled the first significant cost-of-living intervention of his premiership.

"The abolition of VAT on household electricity bills from October should provide some welcome relief for households, although it will only make a modest dent in overall energy costs, amounting to around £45 per year for a typical bill payer. Investors will now be looking beyond the immediate announcement to how further support measures can be funded while keeping the public finances on a sustainable footing.

"The latest snapshot of the UK labour market highlights the difficult inheritance facing the new government. While unemployment has edged slightly lower compared with the previous quarter, suggesting employers are hanging on to staff, the rise in the claimant count underlines that many families continue to feel the squeeze.

"Employment has largely stalled and economic inactivity remains stubbornly elevated, pointing to an economy that's proving a little more resilient than expected but still sluggish. Sterling has nudged higher, an indication that investors are increasingly pricing in two further interest rate hikes from the Bank of England after figures showed the jobs market is holding up better than forecast."

However, that resilience comes with a sting in the tail for the Burnham administration, Streeter said. She pointed out that ff borrowing costs stay higher for longer, it will make the task of repairing the public finances while delivering further cost-of-living support even more difficult.

In equity markets, defence stocks were among the top performers, with Babcock, BAE Systems, Rolls-Royce and Qinetiq all higher on the back of former Defence Secretary Healy's appointment as chancellor.

Neil Wilson, UK investor strategist at Saxo Markets, said: "His appointment is interesting since he has repeatedly called on the government to raise defence spending to 3% of GDP and resigned from Keir Starmer's cabinet over this point and backed the idea of war bonds - new issuance to cover the cost of extra defence spending."

Outsourcing and energy services firm Mitie rocketed as it agreed to be bought by rival OCS Group in a £3.1bn deal.

Kier Group surged as the construction and infrastructure firm said full-year profit and revenue were set to be at the top end of market expectations as strong trading momentum in the first half continued through the second half of the year.

On the downside, caterer Compass slumped despite saying it had delivered another "strong" quarter, posting 7.1% organic revenue growth as net new business accelerated into its 4-5% target range, which it expects to hit for a fifth straight year.

Market Movers

FTSE 100 (UKX) 10,503.75 -0.20%

FTSE 250 (MCX) 23,632.36 0.39%

techMARK (TASX) 5,880.77 -0.08%

FTSE 100 - Risers

Babcock International Group (BAB) 1,111.00p 6.40%

BAE Systems (BA.) 1,932.50p 2.88%

Antofagasta (ANTO) 3,580.00p 2.86%

Glencore (GLEN) 525.20p 2.34%

Fresnillo (FRES) 2,523.00p 2.08%

Marks & Spencer Group (MKS) 389.30p 2.00%

Anglo American (AAL) 3,425.00p 1.81%

Smiths Group (SMIN) 2,597.00p 1.33%

Persimmon (PSN) 1,058.00p 0.91%

Rolls-Royce Holdings (RR.) 1,370.60p 0.88%

FTSE 100 - Fallers

SEGRO (SGRO) 882.20p -2.64%

Compass Group 11 (CPG) 30.84p -2.41%

Entain (ENT) 552.40p -1.89%

InterContinental Hotels Group (IHG) 153.85p -1.85%

JD Sports Fashion (JD.) 86.58p -1.63%

BT Group (BT.A) 193.45p -1.55%

Smith & Nephew (SN.) 1,122.50p -1.32%

Autotrader Group (AUTO) 494.90p -1.29%

The Sage Group (SGE) 839.20p -1.29%

Pearson (PSON) 1,228.50p -1.29%

FTSE 250 - Risers

Mitie Group (MTO) 211.00p 39.74%

Rosebank Industries NPV (ROSE) 324.50p 7.53%

Kier Group (KIE) 234.40p 5.57%

AO World (AO.) 91.30p 4.69%

QinetiQ Group (QQ.) 471.40p 4.38%

Aston Martin Lagonda Global Holdings (AML) 37.16p 4.04%

Serco Group (SRP) 236.60p 3.76%

Hochschild Mining (HOC) 438.60p 3.69%

Ceres Power Holdings (CWR) 364.00p 3.36%

Pan African Resources (PAF) 91.45p 3.22%

FTSE 250 - Fallers

Trainline (TRN) 216.00p -3.57%

SDCL Efficiency Income Trust (SEIT) 37.35p -3.11%

GB Group (GBG) 218.50p -2.65%

WPP (WPP) 282.20p -2.46%

GCP Infrastructure Investments Ltd (GCP) 80.70p -2.18%

Hansa Investment Company Limited (DI) (HAN) 320.00p -1.84%

Gamma Communications (GAMA) 952.00p -1.58%

HGCapital Trust (HGT) 368.00p -1.47%

SSP Group (SSPG) 182.70p -1.41%

Oxford Biomedica (OXB) 600.00p -1.32%