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London open: Stocks extend gains as pound wallows ahead of busy data day
London’s FTSE 100 index was extending gains on Friday morning as the pound stabilised after a steepling 1.7% fall on the Bank of England’s dovish hike.
The UK stock benchmark index was up 21 points or 0.28% to 7,576.10 after half an hour of trading, adding to the 0.9% gain the previous day and following a record close for the Dow Jones on Wall Street but mixed results elsewhere.
Sterling’s 1.71% tumble against the dollar the previous day, which was the largest since the reaction to the Brexit referendum in June last year, benefits the Footsie’s significant contingent of internationally focused companies.
The pound was hit by very dovish talk from BoE Governor Mark Carney, while across the Atlantic, Donald Trump confirmed his nomination of Jerome Powell for Federal Reserve chief and the Republicans published full details of their tax reform plans.
Soft data on the UK services sector and a big day of hard economic data stateside today is likely to see the needle twitching on the GBP/USD again on Friday.
At 1230 GMT, the US Department of Commerce is expected to publish data showing a bumper 310,000 person jump in non-farm payrolls for October, following an unexpected drop of 33,000 in September, as the effects of hurricanes Harvey and Irma unwind and reconstruction efforts are stepped up on the Gulf Coast.
“The US jobs report is widely regarded as the most important economic report each month and yet, in a week that’s been packed full of other major announcements, it’s not attracted the same kind of attention it usually would,” said analyst Craig Erlam at Oanda.
“Still, with the Fed now poised to raise interest rates again in December having passed up the opportunity to earlier this week, focus will be on the jobs data for signs of weakness.”
Job creation and unemployment figures will draw the lions share of attention from currency traders, but Erlam said wage growth is likely have a larger influence on Fed policy.
The consensus forecast is for an unusually large 312,000 number of new jobs following the hurricane-hit decline a month earlier.
“While this rebound in jobs will come as a relief, it’s unlikely to trigger the same kind of move that it normally would in the absence of the previous month’s decline,” said Erlam.
Ahead of that, at 0930 GMT IHS Markit will release its services sector purchasing managers’ index for last month, with consensus forecasting a print of 53.4, down from the 53.6 recorded in September.
Looking at individual London stocks, IAG was flying higher after upping its long term cash flow targets ahead of a capital market day briefing to investors and analysts.
Precious metals miners Fresnillo and Randgold Resources were among the top riser after gold prices hit fresh two-week highs on the back of the proposed Republican tax plans.
Hospital operator NMC Health was top riser on the blue chip index as Deutsche Bank analysts raised their target to 3,920p from 2,820p.
Centrica was slightly higher after making a foray onto the Continent with the acquisition of European demand response aggregator REstore, for €70m (£62m) in cash. The company manages peak loads from a portfolio of industrial and commercial customers across Belgium, the UK, France and Germany.
Smith & Nephew fell in early trading but was quickly back to par after saying its full year profits would be at the lower end of its guidance after a third quarter where growth was flat outside US and emerging markets but saw its artificial hips business returned to growth.
TP ICAP was a big faller as it updated the market on its trading for the third quarter on Friday and revealing its finance chief was leaving.
