FTSE 100 hits record high as job market data weakens pound; AstraZeneca shines

London's export-focused FTSE 100 surged 0.8% to a new intraday record, propelled by a weakening pound after UK economic data revealed unemployment rising to a four-year high of 5% and slowing wage growth, bolstering expectations for a December Bank of England rate cut. AstraZeneca reached an all-time high, solidifying its position as the UK's largest listed stock, while Vodafone climbed 5.5% on an upgraded profit forecast and its first dividend hike in eight years. Conversely, Hilton Food slumped 22.5% on a challenging profit outlook for the next financial year.

Analysis

London's export-focused FTSE 100 index achieved a new intraday record peak, rising 0.8%, primarily driven by a weakening pound. This currency depreciation followed economic data revealing UK unemployment at a four-year high of 5% and continued slowing wage growth, which has significantly bolstered expectations for a Bank of England rate cut in December. Deutsche Bank's chief economist Sanjay Raja noted these figures suggest increasing slack in the labor market, encouraging for the Monetary Policy Committee.

Several blue-chip and mid-cap companies contributed to the positive market sentiment. Drugmaker AstraZeneca climbed 1.7% to an all-time high, solidifying its position as the UK's largest listed stock by market value, fueled by recent forecast-beating quarterly results. Vodafone also surged 5.5% to a two-year high after raising its annual profit forecast and announcing its first dividend increase in eight years, supported by strong performance in Germany.

Further positive momentum was observed in Oxford Instruments, which gained 12.7% on improved order momentum, and 4imprint Group, up 17% after raising its full-year profit and revenue forecasts. Conversely, food supplier Hilton Food experienced a sharp decline, slumping 22.5% to its lowest level since 2015, following a challenging profit growth outlook for the next financial year, highlighting idiosyncratic risks within the market.

Key Decisions for Investors

• Investors should consider increasing exposure to export-oriented UK equities, particularly FTSE 100 components, which benefit from a weaker pound and potential monetary easing from the Bank of England.
• Evaluate companies demonstrating robust fundamental performance and positive forward guidance, such as AstraZeneca, Vodafone, and Oxford Instruments, for potential continued capital appreciation.
• Exercise heightened caution and conduct thorough due diligence on companies issuing negative profit outlooks, as evidenced by Hilton Food's significant share price depreciation.