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London open: Stocks steady as investors eye trade developments, payrolls
London stocks were steady in early trade on Friday, with traders reluctant to make any big moves either way as they kept an eye on global trade developments and looked to the release of the non-farm payrolls report.
At 0830 BST, the FTSE 100 was flat at 7,319.19, while the pound was up 0.1% against the dollar at 1.2942 and down 0.1% versus the euro at 1.1117.
Trade was very much in focus again as relations between the US and China could sour further later in the day if Trump goes ahead and slaps tariffs on a further $200bn of Chinese goods.
“Tariffs could be as high as 25%. The consultation-period is over – now we look to see what Trump does. Does he double down – this would be true to form – or does he hold off for now?” said Markets.com analyst Neil Wilson.
Meanwhile, a report out on Thursday suggested that the US President could target Japan next. According to CNBC, Trump hinted to a Wall Street Journal columnist that he might next take up trade issues with Japan.
US talks with Canada were also ongoing, as Canada’s foreign affairs minister Chrystia Freeland heads to Washington to thrash out a NAFTA deal.
“Trump is threatening to exclude Canada from the Mexico-US deal, but needs to show to the electorate before the November mid-term elections that he can strike a positive deal,” Wilson said.
The other big focus will be the US non-farm payrolls report, which is due at 1330 BST along with the unemployment rate.
The payrolls number is expected to show an improvement on the disappointing 157k headline number in July, which again would appear to show that the amount of new jobs is starting to become scarcer, said CMC Markets analyst Michael Hewson.
“Expectations are for 198k new jobs for August with the unemployment rate set to fall further from 3.9% to 3.8%.
“Of greater importance given the slowing in the headline numbers for US jobs will be the wages numbers, which if they don’t start to edge up towards 3% could actually start to act as a welcome headwind to the advance in the US dollar. Expectations are for wages to remain unchanged at 2.7%, however any move back towards the highs this year at 2.9% will put further upward pressure on the US dollar, as well as exerting further pressure on emerging markets.
“What today’s numbers won’t do is change the probability of a US rate rise this month, as that still remains a done deal in the eyes of the markets.”
In corporate news, Greene King surged as it said positive momentum in its Pub Company unit continued through the summer with like-for-like sales up 2.8% for the first 18 weeks of the year, ahead of the market, which was up 1.2%.
AstraZeneca ticked a touch higher after saying that it and Amgen have been granted a breakthrough therapy label for their drug to treat a type of severe asthma by the US Food and Drug Administration.
Ashmore rallied after it reported steady full-year pre-tax profit and record net inflows, as it said it was in the process of establishing an office in Ireland ahead of Brexit.
Playtech was in the green as it sold around 11.4 million shares in Plus500 – its entire stake – at 1,550p per share, realising gross proceeds of approximately £176m that will be used for general corporate purposes and debt reduction. Plus500 shares slumped.
On the downside, International Consolidated Airlines Group was the worst performer after British Airways announced that the credit information of at least 380,000 customers had been compromised in a data theft.
Healthcare company BTG slipped after saying it was paying up to $130m in cash to buy Ireland-based Novate, which specialises in the prevention of pulmonary embolism (PE) in patients at high risk of venous thromboembolic events.
In broker note action, Shire was cut to ‘hold’ by Berenberg, while DCC was initiated at ‘outperform’ by RBC Capital Markets and Burberry was downgraded to ‘neutral’ at Goldman Sachs.
