Stocks in London were a mixed bag on Friday at the open, although the FTSE 100 was up, as investors await the US jobs data read later in the day, with increasing hopes it would seal the deal on the US Federal Reserve would pause hiking interest rates.
‘Investors have already had plenty of economic releases to digest this week, but arguably the most crucial data point as far as the Fed is concerned will be the non-farm payrolls,’ said Tim Waterer, chief market analyst at KCM Trade.
The FTSE 100 index opened up 33.64 points, or 0.5%, at 7,472.95. The FTSE 250 was down 20.14 points, or 0.1%, at 18,584.73, and the AIM All-Share was down 1.53 points, or 0.2%, at 740.40.
The Cboe UK 100 was up 0.3% at 744.01, the Cboe UK 250 was marginally lower at 16,249.59, and the Cboe Small Companies was up 0.3% at 13,026.19.
The eagerly-awaited US non-farm payroll data will be released at 1330 BST. Markets are expecting nonfarm payrolls to rise by 170,000 in August, down from 187,000 in July.
Earlier in the week, the ADP National Employment Report showed job growth in the US private sector slowed significantly in August.
Private sector employment increased by 177,000 jobs, ADP said, down sharply from 371,000 jobs in July and below FXStreet-cited consensus, which had expected 195,000 jobs to be added.
Should the non-farm payrolls report show a similar slowdown, bets are likely to increase that the Federal Reserve may soon be done when it comes to further interest rate hikes.
Alternatively, if the data comes in stronger than expected, rate expectations could tilt back in favour of the Fed needing to tighten further before the end of the year.
Currently, markets see an 89% chance of the US central holding rates steady at its next meeting this month and a 56% chance of this being the case again in the Fed’s November meeting, according to the CME Fed Watch Tool.
The dollar was slightly softer ahead of the payroll numbers. The pound was quoted at $1.2686 at early on Friday in London, up from $1.2671 at the close on Thursday. The euro stood at $1.0858, higher against $1.0847. Against the yen, the dollar was trading at JP¥145.46, lower compared to JP¥145.65.
In London, Shell and BP were among the top blue-chip performers in early morning trade, up 1.5% and 2.7% respectively, as oil prices continued their upward trajectory.
Brent oil was quoted at $87.05 a barrel at early in London on Friday, up from $85.88 late Thursday.
Supply tightening was the main driver behind the rise, with Opec+ production cuts expected to be extended and storm Idalia continuing to threaten oil production in the US Gulf Coast.
Johnson Matthey was the top performer in the FTSE 100 in early morning trade, surging 14%.
On Wednesday, FTSE Russell confirmed that the speciality chemicals firm would be removed from London’s flagship index from the market open on Monday, September 18.
In the FTSE 250, Diversified Energy added 1.3%.
The US-focused energy company said its latest half-year results reflected the ‘resilience’ and ‘consistency’ of its business as it reported record average net daily production and higher adjusted earnings.
In the six months ended June 30, Diversified reported a ‘record’ average net daily production of 852 million cubic feet equivalent per day, up from 816 million cubic feet equivalent per day the year prior.
Its adjusted earnings before interest, tax, depreciation and amortisation increased to $283 million from $224 million as its adjusted cost per unit reduced to $1.66 per million cubic feet equivalent from $1.84 per million cubic feet equivalent.
Elsewhere in London, CentralNic rose 1.0% after it announced acquired Adrenalads for $2.4 million in cash.
The internet services holding company that develops and manages online marketplaces described Adrenalads as a ‘premium source’ of tier-1 search and direct navigation traffic, catering specifically to e-commerce platforms.
It is expected the acquisition will be immediately earnings accretive.
In European equities on Friday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both 0.1% higher.
In Tokyo on Friday, the Nikkei 225 index closed up 0.3%. The S&P/ASX 200 in Sydney closed down 0.4%.
In China, the Shanghai Composite was closed up 0.4%, while the Hang Seng index in Hong Kong unexpectedly closed on Friday as super typhoon Saola barrelled towards China’s southern coast.
The finance hub issued a T8 threat warning – the city’s third-highest – around 0240 HKT and the city’s bourse said the‘ morning trading sessions for all markets will be cancelled’.
On China’s mainland, authorities issued the highest typhoon warning for the storm, which state media said would make landfall ‘in the coastal areas stretching from Huilai to Hong Kong’ on Friday afternoon or evening.
Gold was quoted at $1,943.08 an ounce early Friday, higher against $1,942.51 at the London equities close on Thursday.
Still to come in Friday’s economic calendar, the UK manufacturing PMI will be released at 0930 BST.
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