London stocks open higher as unemployment hits 5yr high

• FTSE rises 32 points to 10,505

• UK unemployment rises to 5.2%

• Pound falls as investors expect sooner BoE rate cut

• IHG impresses with final results and shareholder returns

Antofagasta shares are leading the FTSE fallers after it reported annual results and copper prices fell.

Revenue of US$8.6 billion was in line with forecasts but cash costs were a bit higher than expected, though EBITDA was in line with consensus at US$5.2 billion.

However, the final dividend of 48 cents was down on the consensus estimates of 56.5 cents, while there was no change to guidance for 2026.

Dan Lane, analyst at Robinhood UK, said the 53% hike in pre-tax profits and EPS more than doubling “both underscore the positive drivers of higher copper prices and disciplined cost control”.

“With strong cash flow, a bumper dividend and medium-term projects on track, the story now turns squarely to the next stage in the copper cycle, which will likely be written in Beijing and global industrial demand.”

He sees the structural copper story as “intact” but notes that prices “could swing on Chinese data and governmental policy. These results reinforce Antofagasta’s operational credibility but copper bugs now need to watch China’s economic pulse and broader industrial activity.”

Some more thoughts on the ONS jobs data, where the headline rate rose to 5.2%, youth unemployment hit a new high of 16.1% and HMRC payrolled employees fell for a fifth consecutive month.

Sanjay Raja, chief UK economist at Deutsche Bank, says the report contains “worrying signs in the labour market”, as rising employee costs have “spurred a substitution from labour to capital”.

He says the data suggests the unemployment rate could climb higher, with a “little more room to go before we hit the cyclical peak”, with the single month jobless rate already sitting at 5.4% and HMRC data suggests more redundancies are ahead.

“Put simply, the jobs market remains stuck. For the Bank of England, today’s data will only add to market expectations that more rate cuts are coming,” Raja says, but sticking to his base-case of two more interest rate cuts this year.

George Lagarias, chief economist at Forvis Mazars, says: “The soft underbelly of the UK economy is emitting a distress signal.”

As well as unemployment reaching a five-year high, he points out that private sector wages for the first time in two and a half years are not growing above the inflation rate.

“Household consumption constitutes over 60% of the economy and these numbers may eventually begin to scare consumers away from purchases.

“The question for markets and the real economy is whether they are enough to also scare the Bank of England into accelerating much anticipated rate cuts.”

Matt Swannell, chief economic advisor to the EY ITEM Club, picks up on the point made by Rob Wood below, saying the ONS numbers offer some “signs that recent downward momentum might be starting to recede”.

He also notes that some members of the BoE’s monetary policy committee suggested they were less concerned than before about the strength of pay growth, with settlements nearing a target-consistent pace amid a renewed focus on weak growth and labour market conditions.

The MPC is “likely” to be cut at “one of the next two meetings, but today’s data doesn’t offer a clear steer on March or April”, he reckons.

The FTSE 100 has marched higher in first deals, rising 39 points to 10,505.

Companies hit by the ‘AI scare trade’ in recent weeks are leading the way: RELX is up 3.3%, Experian 2.45% and Pearson 2.1%.

InterContinental Hotels is also on the early leaderboard, up 1.7% on the back of its final results.

Miners are the main fallers, with Antofagasta and Fresnillo down 2.7% and 1.8% as copper and precious metals fall over 1%.

Some company news.

Intercontinental Hotels has hiked its dividend 10% and unveiled a $950 million share buyback after a year of record hotel openings.

Life and pensions consolidator Chesnara has agreed to buy Scottish Widows Europe, a Luxembourg-based closed life insurance business owned by Lloyds Banking Group, for €110 million in cash. The deal comes just two weeks after Chesnara closed its £260 million acquisition of HSBC’s UK life business.

Elsewhere, Boohoo, aka Debenhams, is looking to raise about £35 million as it seeks to cut debt and give itself more breathing space. The online fashion retailer said the planned equity fundraise, priced at 20p a share compared to the last close at 22.5p, will create additional liquidity and deliver what it called the “optimal capital structure”.

The rise in unemployment, drop in average weekly earnings growth “suggest sharply fading inflation pressures”, says economist Rob Wood at Pantheon Macroeconomics.

“Combined with payrolls still falling slightly, the MPC doves have enough to cut rates in March rather than waiting until April, so markets would be right to ramp up the probability of a March cut.”

However, he says, other elements of the jobs data suggest stabilisation, with payrolls falling a lower-than-consensus rate and December’s and November’s changes were revised up, with private payrolls falling only 6K month-to-month in January, the smallest drop since January 2025.

“Slowing in payrolls falls suggests the unemployment rate will at least stabilise soon. The months long Budget circus seemed to temporarily derail labour market stabilisation, but job growth can continue to gradually improve now that uncertainty is falling.

“The same message comes from vacancies, which have been broadly stable for eight months.”

The pound is down 0.5% versus the dollar as the chances of a Bank of England rate cut at the March meeting have increased due to the rising unemployment rate and softer wage growth.

FTSE futures have ticked up too, with a gain of around 15 points now expected.

UK unemployment has increased to the highest level in nearly five years, according to figures out this morning from the Office for National Statistics.

The jobless rate rose to 5.2% in the three months to December, the highest since the start of 2021, from 5.1% in November, where it had been expected to remain.

Average weekly earnings excluding bonuses grew 4.2%, down from 4.6% in November and below the consensus forecast of 4.6%.

In more timely data, payrolled employment fell by 11K month-to-month in January, after dropping by 6K in December, better than the consensus forecast of a 20K decline.

December payroll job growth was revised better from an initially estimated -43K month-to-month fall.

The FTSE 100 has been called flat on Tuesday, with European and US stock futures pointing lower and gold on the back foot.

London’s blue-chip index is expected to open one point in the red, a small step back after adding 27.3 points to close at 10,473.69 on the week’s first day of trading.

German and French futures were suggesting much sharper falls, following a mixed session the day before when global volumes were lower due to US and Chinese markets being on holiday.

US markets return later from the long weekend, with futures indicating the Nasdaq may lead losses.

Investors are “no longer hungry for risk”, says market analyst Ipek Ozkardeskaya at Swissquote, pointing to the Nikkei down this morning in Tokyo despite a notable fall in Japanese yields on rising bets that Sanae Takaichi would maintain fiscal discipline while supporting the economy (though how that balance would be achieved remains unclear!).

“SoftBank Group, a proxy for Big Tech appetite, is down more than 5.5% at the time of writing, while Nasdaq Composite futures are leading losses among major US indices.

“In the absence of fresh catalysts — and with existing headwinds unchanged — there is little reason for this bearish tech momentum to reverse. On the contrary, concerns around increasingly leveraged AI spending are intensifying.”