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London open: Stocks open lower ahead of US non-farm payrolls
London stocks opened in the red on Friday as traders looked ahead to the afternoon’s US non-farm payrolls report.
At 0807 GMT, the FTSE 100 fell 0.74% to 6,702.94 points.
The non-farm payrolls data, released at 1330 GMT, is expected to show employers added 180,000 jobs in November. The unemployment rate is forecast to remain at 4.9%, while average hourly earnings are estimated to have grown 2.8% year-on-year and 0.2% month-on-month.
A strong jobs report is likely to cement expectations for an interest rate hike by the Federal Reserve this month.
Jasper Lawler, market analyst at CMC Markets, said: “Today’s non-farm payrolls report will, as always be the main event for the US dollar- but the report doesn’t carry its usual significance. The Fed is likely to raise rates in December regardless so the NFP report won’t have any immediate implication for monetary policy.”
He added: “It may have some implication for market’s willingness to accept the prescribed monetary policy. The hawkish talk from the Fed, even since the election, has been backed up by mostly strong US economic data.”
Closer to home, UK data on the construction industry from Markit will be released at 0930 GMT.
Investors will also watch movements in the pound after the currency rose against the dollar on Thursday in response to the suggestion that Britain could make contributions to the budget of the European Union to pay for single market access.
Brexit secretary David Davis made the proposal on Thursday, saying the government would consider its options during divorce negotiations with the trading bloc.
The pound was up 0.31% against the dollar to $1.2630 at 0809 GMT.
Meanwhile, oil prices reversed its OPEC-fuelled rally after the cartel agreed to cut production on Wednesday, as traders awaited the Baker Hughes rig count report at 1800 GMT. Brent crude fell 1.2% to $53.25 per barrel and West Texas Intermediate dropped 0.79% to $50.66 per barrel at 0811 GMT.
On the corporate front, Berkeley Group’s shares jumped after the property developer reported an increase in first half earnings and revenue that beat forecasts.
In the six months ended 31 October, pre-tax profit gained 33.9% to £392m compared to the same period a year earlier, exceeding estimates of about £351.7m. Revenue rose 24.1% to £1.41bn, beating expectations of £1.31bn and driven by the sales of new homes in London and the South East of England.
Laird’s shares plummeted after proposing to raise £185m through a rights issue and scrapping its final dividend in a bid to strengthen its financial position.
Through the proposed rights issue, the company will offer shares to existing shareholders in proportion to their existing holdings in the first quarter of 2017.
G4S shares edged lower after agreeing to sell its Israeli arm, G4S Israel, to private equity fund FIMI Opportunity Funds for an estimated net consideration of 425 million new Israeli Sheqel (£88m) in cash.
Chief executive officer Ashley Almanza said: “The sale of our business in Israel is part of our active portfolio management programme announced in 2013 to improve our strategic focus and capital discipline.
“G4S Israel is a well-managed business that will grow and prosper as part of the FIMI group providing a positive future for our 6,000 colleagues in Israel and long term, high quality service and support to customers operating in the Israeli market.”
