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London pre-open: Stocks to edge up ahead of non-farm payrolls

Fri 06 October 2017 07:18 | A A A

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(ShareCast News) - London stocks were set to edge up at the open on Friday, underpinned by a weaker pound, as investors eyed the latest non-farm payrolls report.

The FTSE 100 was called to open seven points higher at 7,511.

Jasper Lawler, head of research at London Capital Group, said: "The British pound has fallen out of bed since the end of the Conservative party conference. Luckily for UK investors, the pound's negative correlation with returns on blue chip stocks is going strong. The FTSE 100 is sitting pretty above 7500, having gained 300 points in 3 weeks.

"The pound's weakness is not simply a function of dollar strength, the fact that it is falling against the euro too would suggest the causes are local. MPs' confidence in Theresa May is at a low-point. But having made it through the poor election result, it would seem daft for her to quit, in effect because she had a cold. If May can hang on, the pound is due a correction of recent losses, at least against the euro."

Sterling was down 0.3% versus the greenback to 1.3086 at 0720 BST, and 0.1% weaker against the euro at 1.1188.

On the UK data front, Halifax house prices are at due at 0830 BST, but the US will be the main focus, with non-farm payrolls for September, the unemployment rate and average hourly earnings at 1330 BST.

"Expectations are unusually wide-ranging for today's non-farm payrolls so there is good scope for surprise. Consensus expectations are that the US created 90k jobs in September, down from 156k in August. It would probably need a contraction in the US workforce in September to put off a Fed seemingly intent on its third rate hike this year," said Lawler.

In corporate news, CRH's proposed $3.5bn acquisition of US-based Ash Grove has been derailed after the Kansas company received a potentially larger rival offer.

In a statement overnight, Ash Grove said it would hold a shareholder meeting on 1 November to "consider and vote on a proposal" to accept the CRH offer, after receiving a "preliminary, non-binding competing proposal from a third party" to acquire it for an indicated value of $3.7-3.8bn.

Budget airline easyJet said that headline pre-tax profit for the year is expected to be at the upper end of the previously guided range as it reported a record number of passengers over the summer.

Profit is expected to come in between £405m and £410m for the year to the end of September 2017.

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