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London open: Stocks edge higher ahead of payrolls report
London stocks edged higher in early trade on Friday, taking their cue from a positive close on Wall Street as investors eyed the release of the latest US non-farm payrolls report.
At 0830 BST, the FTSE 100 was up 0.2% at 7,091.31, while the pound was 0.1% firmer against the dollar at 1.2338 and flat versus the euro at 1.1251.
London Capital Group analyst Jasper Lawler said: “We are taking heart from the higher close on Wall Street and putting the whipsaw action that got us there to one side. Opening gains are being tempered by caution ahead of a key monthly US jobs report.”
The payrolls report, unemployment rate and average earnings are all due at 1330 BST. Payrolls are expected to have risen by 145,000 in September, while the unemployment rate is forecast at 3.7% and average hourly earnings are expected to have risen 0.3%.
“If jobs numbers meet or beat expectations, it will be welcome news for the US economy but will undermine the case for more aggressive easing from the Fed,” said Lawler. “The Fed is clearly worried about Trump’s trade war, and the decade-low in US manufacturing activity this month supports this view. But we think they only start to react with looser policy when the US consumer is affected, and that will start when unemployment rises.”
On home turf, Brexit was in focus as always after the European Union said it was “open but not convinced” by Prime Minister Boris Johnson’s new proposals.
CMC Markets analyst David Madden said: “There are questions over whether Boris Johnson’s proposals will be accepted by the EU, but for now dealers seem to think a deal will be managed or at least an extension will be granted. There was a report circulating that the EU have given Mr Johnson one week to revise his proposals as they don’t meet their standards.”
In equity markets, London Stock Exchange was the standout gainer after Reuters reported that investors have told Hong Kong Exchanges and Clearing that any bid must contain more cash and be up to 20% higher to persuade them to engage. Reuters cited three shareholders and a banking source.
BP was in the green as the oil giant said chief executive Bob Dudley would step down next February after nine years at the helm and be replaced by Bernard Looney, who heads up the upstream operations.
Aerospace parts maker Meggitt ticked up as it won a $48m US army contract to supply aerial weapons scoring systems.
Workspace was higher after saying it was selling a property in London’s Farringdon district for £14.8m at a premium of 47.5% (£4.75m) to a March 31 valuation, a net initial yield of 1.3% and a capital value of £1,000 per sq ft.
AstraZeneca gained after the US Food and Drug Administration approved its Fasenra respiratory treatment for self-administration.
JD Sports was boosted by an initiation at ‘outperform’ at Exane, but Marks & Spencer was knocked lower by a downgrade to ‘reduce’ at HSBC.
Insurers were the worst performers after the Financial Conduct Authority outlined a series of measures to address competition issues in the UK home and motor insurance market, pointing out that around 6 million customers are paying high prices and not getting a good deal. Admiral, Legal & General, Aviva, Direct Line and Hastings were all weaker.
