London close: Stocks weaker as UK jobless rate holds steady
By Josh White
Date: Tuesday 16 Sep 2025
(Sharecast News) - London stocks fell on Tuesday as better-than-expected UK labour market data dampened hopes of further interest rate cuts from the Bank of England this year.
The FTSE 100 index dropped 0.88% to close at 9,195.66, while the more domestically focused FTSE 250 declined 0.71% to 21,491.87.
In currency markets, sterling was last up 0.4% on the dollar to trade at $1.3654, while it weakened 0.35% against the euro, changing hands at €1.1523.
"London's FTSE 100 index dropped on Tuesday as investors considered varied corporate reports and remained wary ahead of central bank meetings, although rising metal miners helped to limit the declines," said Patrick Munnelly, market strategy partner at TickMill.
"The Bank of England is expected to keep interest rates steady this week, following a rate cut in August.
"Furthermore, US president Donald Trump is scheduled to arrive in Britain late on Tuesday for a second state visit, during which the two countries will finalise agreements valued at over $10bn."
Russ Mould, investment director at AJ Bell, noted that "a barrage of US companies are expected to announce big investments in the UK to coincide with Donald Trump's state visit.
"Google-owner Alphabet is the latest name in the frame, with news it will spend £5bn in the UK on AI-related infrastructure investments and scientific research," Mould continued.
"Despite the headline-grabbing news, the expected wave of US investment wasn't enough to lift the UK stock market."
US industrial activity edges higher, UK unemployment holds steady
In economic news, US industrial activity edged higher in August, rebounding from the steepest monthly decline in almost a year, according to Federal Reserve data.
Industrial production rose 0.1% over the month after a revised 0.4% fall in July, beating forecasts for a 0.1% drop.
Manufacturing output increased 0.2% as motor vehicle and parts production surged 2.6%, offsetting weakness in fabricated metals and machinery.
Mining output rose 0.9% and utilities production jumped 2.0%.
Capacity utilisation in manufacturing ticked up to 76.8%, though it remains 1.4 percentage points below its long-run average.
On home shores, UK jobs data showed the unemployment rate holding steady at 4.7% in the May-to-July period, with wage growth easing.
The Office for National Statistics said annual pay growth excluding bonuses slowed to 4.8% from 5.0%, while including bonuses it rose slightly to 4.7% from 4.6%.
Public sector pay rose 5.6% year-on-year, outpacing the private sector's 4.7%.
The number of payrolled employees fell by 142,000 year-on-year in July, and provisional August estimates showed a 0.4% annual drop.
"The labour market continues to cool, with the number of people on payroll falling again, while firms also told us there were fewer jobs in the latest period," said ONS director of economic statistics Liz McKeown.
Munnelly added that "the latest UK labour market data presents a mixed picture.
"The ONS labour force survey reported a solid increase in employment over the three months to July, while more up-to-date HMRC figures revealed payrolls dropped for the seventh consecutive month in August.
"Together, these factors suggest the UK labour market is still cooling, albeit at a slower pace than before."
Analysts said the figures reinforced expectations that the Bank of England will hold rates at 4% on Thursday.
Richard Hunter at Interactive Investor noted that inflation was "hampering [the BoE's] ability to loosen monetary policy," while EY Item Club's Matt Swannell said "the progress of pay growth towards rates consistent with inflation settling at the 2% target remains very slow".
Elsewhere, UK supermarket sales meanwhile strengthened in August as shoppers sought value and stocked up on back-to-school essentials, according to Worldpanel by Numerator.
Take-home grocery sales rose 4.8% in the four weeks to 7 September as food price inflation eased for a second month to 4.9% from 5.0%.
Own-brand products grew 5.9% and now account for 51.2% of sales, while childrenswear sales rose 8.4%.
Tesco led the market with a 28.4% share after sales jumped 7.7% in the 12 weeks to 7 September, its fastest growth since December 2023.
Sainsbury's sales rose 5.4%, Lidl's 11% and Ocado's 11.9%, while Asda's fell 2.7%.
"Value is still at the front of shoppers' minds, and retailers have tapped into this," commented Fraser McKevitt at Worldpanel.
On the continent, German investor sentiment unexpectedly improved this month, with the ZEW economic sentiment index rising to 37.3 in September from 34.7 in August, well above consensus for 26.3.
However, the current conditions index fell to -76.4 from -68.6.
ZEW president Achim Wambach said financial market experts were "cautiously optimistic" but warned that "there are still considerable risks, as uncertainty about the US tariff policy and Germany's 'autumn of reforms' continues".
Gold prices meanwhile hovered near a record $3,700 per troy ounce as a weaker dollar and expectations of Federal Reserve rate cuts bolstered demand.
The metal, up 43% since January, traded at $3,695.50 by 1100 BST.
"Gold has reached yet another high, as a weaker dollar and growing conviction around Fed rate cuts fuel demand for real assets," said Matt Britzman at Hargreaves Lansdown.
SThree leads recruiters lower, Fresnillo shines on strong gold prices
On London's equity markets, recruitment stocks weighed on the market on Tuesday, led by a sharp drop in SThree after the group warned of tougher conditions ahead.
Shares in the recruiter slumped 25.27% as it maintained profit guidance for 2025 but cut its outlook for 2026, citing a decline in third-quarter net fees and persistently weak new business activity.
Sector peers Hays and PageGroup also fell sharply, down 3.94% and 2.8% respectively.
Unilever slipped 0.98% after confirming that acting finance lead Srinivas Phatak had been appointed as its permanent chief financial officer.
Mould said "the appointment of an insider to the role of chief financial officer at Unilever makes sense when you consider the company is committed to a strategic plan which has been in place for some time.
"While bringing in an outsider can offer a fresh perspective, retaining some continuity and having a senior leadership team which already has experience of working together is logical while the company completes its ice cream demerger and focuses on its so-called 'power brands'."
Hochschild Mining reversed early gains to close 2.21% lower following the appointment of Vale veteran Cassio Diedrich as its new chief operating officer.
On the upside, Fresnillo rose 2.09% as gold prices hovered near $3,700 per ounce on a weaker dollar and mounting expectations of a Federal Reserve rate cut this week.
Trustpilot surged 14.96% after lifting its full-year outlook on the back of stronger-than-expected first-half earnings, while Kier Group climbed 7.03% after it reported a 15% jump in annual profits and said trading in the new financial year had started slightly ahead of expectations.
Mould said "the latest results from Kier are a decent parting gift from CEO Andrew Davies.
"Slowly, but surely, Davies has rebuilt the foundations of the business, and he hands it over to his successor Stuart Togwell in much better shape than he found it.
"A record order book and a strong balance sheet are the most significant bits of evidence of Davies' work."
In broker-driven moves, Ashtead Group gained 0.75% following an upgrade to 'outperform' at BNP Paribas Exane.
Haleon slid 4.77% after a downgrade to 'equalweight' from 'overweight' at Barclays.
Munnelly noted that "the brokerage points out that the main challenge for Haleon is the difficult situation in the US, where both consumer spending is slowing down and there are destocking pressures."
EasyJet dropped 3.34% on a downgrade to 'neutral' from 'overweight' at JPMorgan.
Mould observed that easyJet was a big faller "after a broker downgrade acted as a headwind for the stock," while Munnelly added that "weaker pricing is expected to persist into winter as rising capacity growth from EZJ and competitors coincides with a saturated UK leisure market."
Domino's Pizza Group fell 2.94% after Deutsche Bank cut its rating to 'hold' from 'buy' and slashed its price target to 235p from 309p.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 9,195.66 -0.88%
FTSE 250 (MCX) 21,491.87 -0.71%
techMARK (TASX) 5,371.16 -0.98%
FTSE 100 - Risers
Fresnillo (FRES) 2,242.00p 2.09%
Sainsbury (J) (SBRY) 322.80p 1.57%
Croda International (CRDA) 2,556.00p 1.55%
Glencore (GLEN) 310.55p 1.21%
Mondi (MNDI) 1,007.50p 1.11%
Kingfisher (KGF) 246.00p 1.11%
RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 99.72p 1.10%
Informa (INF) 903.60p 0.92%
Associated British Foods (ABF) 1,978.00p 0.84%
Ashtead Group (AHT) 5,372.00p 0.75%
FTSE 100 - Fallers
Haleon (HLN) 339.70p -4.77%
WPP (WPP) 383.60p -3.50%
easyJet (EZJ) 457.20p -3.34%
Prudential (PRU) 1,002.50p -2.67%
Barclays (BARC) 374.85p -2.55%
Coca-Cola HBC AG (CDI) (CCH) 3,598.00p -2.49%
NATWEST GROUP (NWG) 524.40p -2.49%
Aviva (AV.) 659.20p -2.43%
Phoenix Group Holdings (PHNX) 642.00p -2.36%
ICG (ICG) 2,238.00p -2.36%
FTSE 250 - Risers
Trustpilot Group (TRST) 230.60p 14.96%
Kier Group (KIE) 205.50p 7.03%
Chemring Group (CHG) 599.00p 4.72%
Pollen Street Group Limited (POLN) 902.00p 2.97%
Energean (ENOG) 880.50p 2.92%
RIT Capital Partners (RCP) 2,015.00p 2.39%
Pacific Horizon Inv Trust (PHI) 718.00p 1.56%
Dr. Martens (DOCS) 91.45p 1.44%
Aston Martin Lagonda Global Holdings (AML) 76.00p 1.33%
Genus (GNS) 2,545.00p 1.19%
FTSE 250 - Fallers
The European Smaller Companies Trust (ESCT) 0.00p -100.00%
BlackRock Greater Europe Inv Trust (BRGE) 0.00p -100.00%
Hays (HAS) 54.85p -3.94%
Bridgepoint Group (Reg S) (BPT) 321.80p -3.94%
W.A.G Payment Solutions (EWG) 101.50p -3.79%
Breedon Group (BREE) 356.20p -3.47%
Petershill Partners (PHLL) 231.00p -3.14%
PPHE Hotel Group Ltd (PPH) 1,326.00p -3.07%
Pagegroup (PAGE) 221.80p -2.80%
Barr (A.G.) (BAG) 681.00p -2.71%
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