London midday: FTSE steady ahead of payrolls

(Sharecast News) - London stocks were still steady by midday on Friday as investors awaited the release of the latest US non-farm payrolls report.

The FTSE 100 was flat at 10,828.89, while Brent crude was down 0.5% at $95.03 a barrel and West Texas Intermediate was 0.8% lower at $90.53.

All eyes were on the non-farm payrolls report for August, along with the unemployment rate and average earnings, which are due at 1330 BST. Consensus expectations are for payrolls to have increased by 55,000 last month, while the unemployment rate is expected to have remained at 4.1%.

Richard Hunter, head of markets at Interactive Investor, said: "The usual caveats will then apply - a much stronger than expected number would increase the likelihood of an interest rate hike this month, whereas a weak reading could potentially trigger a market rally alongside a fall in Treasury yields.

"However, barring any major surprises, the importance of the non-farms will be eclipsed by the CPI reading next Friday for this month at least. That release will also mark the last major report before the Fed's interest rate decision and, given that the Fed is more inclined towards the inflation rather than employment side of its dual mandate, it is likely to be the pivotal factor.

"Governor Waller added in his remarks that he would be inclined to support holding rates steady if inflation data was in line with estimates, which sent yields marginally lower. It also reduced market estimates from a 63% likelihood of a rise the previous day to a toss of the coin 50% number."

On home shores, a survey showed the downturn in the construction sector deepened in August. The S&P Global construction purchasing managers' index fell to 44.3 from 44.7 in July, coming in below the 50.0 mark that separates contraction from expansion for the 20th month in a row.

Survey respondents pointed to subdued demand conditions and a reduction in new projects, especially house building starts. All three sub-sectors recorded a reduction in construction activity, with housing the only category to register a faster pace of contraction than in July.

The downturn in residential work was sharper than elsewhere in the construction sector, while commercial activity fell at the slowest rate since January, and civil engineering activity fell the least since March.

Tim Moore, economics director at S&P Global Market Intelligence, said: "UK construction companies experienced another solid reduction in output volumes, with a faster downturn in house building the main reason for a weaker overall performance during August. A sharp and accelerated drop in residential activity more than offset slower falls in the commercial and civil engineering sub-sectors.

"Sluggish demand conditions and low client confidence, combined with anxiety about the impact of the Middle East conflict, were again factors contributing to lower workloads across the construction sector. Total new business nonetheless decreased to the least marked extent for 11 months amid reports of support from transport infrastructure work and some pockets of vitality such as data centre roll outs and energy sector projects.

"Encouragingly, input price inflation eased to its lowest since February and supply chain performance was broadly stable. Softer overall inflation was recorded in August despite upward pressure on operating expenses from higher fuel bills, logistics costs and raw material prices.

"Business optimism was still subdued, as growth projections for the year ahead eased since July and were much weaker than historic trends. Concerns about geopolitical tensions, lacklustre domestic economic prospects and elevated borrowing costs were all noted as holding back confidence."

Elsewhere, figures from the British Retail Consortium and Sensormatic showed that retail footfall improved in August but remained below year-earlier levels. Total UK footfall fell 1.7% year-on-year over the four weeks to 29 August, an improvement on July's 2.1% decline and an increase month-on-month.

There was a dearth of corporate news, but BHP was in focus after saying it "regularly explores options that may create long-term value to its shareholders" following a report that steelmaker China Baowu Steel Group is looking at taking a stake in the company's Jimblebar iron ore mine in Western Australia.

"WAIO remains central to BHP's portfolio and BHP remains fully committed to WAIO and to Western Australia," the company said. The statement came after Reuters reported that Baowu - China's largest steelmaker - is considering a stake of between 15% and 25%, which would come from BHP's share of the project. Reuters sources did not give a potential valuation or other details.

In broke note action, Computacenter rallied after UBS upped its price target on the stock, while Vodafone gained after an upgrade to 'buy' from 'sell' at Goldman Sachs, which hiked its price target to 155p from 85p. The bank cited higher relative returns and equity upside.

Renishaw shot up after an upgrade to 'buy' from 'underperform' at Bank of America.

Market Movers

FTSE 100 (UKX) 10,828.89 -0.02%

FTSE 250 (MCX) 24,555.31 0.24%

techMARK (TASX) 6,084.05 0.13%

FTSE 100 - Risers

Computacenter (CCC) 5,530.00p 2.98%

Vodafone Group (VOD) 124.85p 2.00%

Kingfisher (KGF) 303.00p 1.92%

Fresnillo (FRES) 3,217.00p 1.74%

Spirax Group (SPX) 6,960.00p 1.46%

Centrica (CNA) 149.65p 1.29%

Informa (INF) 918.40p 1.15%

Weir (WEIR) 2,720.00p 0.89%

Smiths Group (SMIN) 2,565.00p 0.87%

Halma (HLMA) 3,614.00p 0.84%

FTSE 100 - Fallers

Experian (EXPN) 2,838.00p -3.99%

Rentokil Initial (RTO) 344.00p -2.47%

IG Group Holdings (IGG) 1,335.00p -1.84%

Relx plc (REL) 2,641.00p -1.57%

Croda International (CRDA) 3,281.00p -1.56%

Prudential (PRU) 1,022.00p -1.44%

Bunzl (BNZL) 2,636.00p -1.27%

London Stock Exchange Group (LSEG) 8,810.00p -1.12%

St James's Place (STJ) 1,151.50p -1.08%

Coca-Cola Europacific Partners (DI) (CCEP) 7,945.00p -1.06%

FTSE 250 - Risers

Renishaw (RSW) 5,150.00p 5.33%

RHI Magnesita N.V. (DI) (RHIM) 2,830.00p 4.97%

Watches of Switzerland Group (WOSG) 687.00p 3.54%

Dr. Martens (DOCS) 71.00p 3.23%

Pan African Resources (PAF) 140.40p 3.01%

Diversified Energy Company (DI) (DEC) 1,168.00p 3.00%

Coats Group (COA) 80.25p 2.88%

AEP Plantations (AEP) 196.40p 2.72%

Raspberry PI Holdings (RPI) 593.75p 2.46%

Seraphim Space Investment Trust (SSIT) 184.40p 2.44%

FTSE 250 - Fallers

Oxford Nanopore Technologies (ONT) 162.10p -5.94%

Rosebank Industries NPV (ROSE) 346.00p -2.26%

Globaldata (DATA) 76.20p -1.86%

Hilton Food Group (HFG) 695.50p -1.83%

Serco Group (SRP) 252.60p -1.79%

Grafton Group Ut (CDI) (GFTU) 994.50p -1.40%

Clarkson (CKN) 5,065.00p -1.36%

Ceres Power Holdings (CWR) 399.40p -1.33%

Volution Group (FAN) 663.00p -1.19%

Safestore Holdings (SAFE) 556.00p -1.16%