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London open: Stocks rise ahead of US non-farm payrolls
London stocks rose ahead of the release of the US non-farm payrolls report which may influence the Federal Reserve’s interest rate decision this month. The Labor Department report is expected by analysts to show that US employers added 202,000 jobs in September, which would mark a pick-up from the previous month’s 173,000. The unemployment rate is projected to remain at 5.1% in September. Average hourly earnings are forecast to rise 2.4% in September compared to the same month a year ago, following a 2.2% rise in August.
The figures will be closely monitored by the Federal Reserve ahead of its 27-28 October policy meeting, as the central bank is taking into consideration a wide-range of economic data in determining the best timing for an interest rate hike. Fed Chair Janet Yellen has said a rate hike is expected by the central bank this year.
“Its payroll Friday again, and although the employment report is of course crucial to second guessing the Fed, it does seem that there are even bigger global issues at the moment that will exert a stronger short-term influence on the Fed,” said Michael Lermer, analyst at Deutsche Bank.
“Nevertheless it’s always important and given the growth fears at the moment a stronger report would probably be better received this month than in the recent past where strong data would have raised concerns about tighter policy.”
In the UK, construction data is due at 0930 BST. The Markit/CIPS construction purchasing managers’ index is forecast to rise to 57.5 in September from 57.3 a month earlier. A reading above 50 signals an expansion while a level below indicates a contraction.
The estimates would mark a slightly more upbeat outlook than Thursday’s manufacturing PMI, which revealed that manufacturers were cutting jobs for the first time in nearly two years.
In company news, financial services companies and banks were the top risers after the Financial Conduct Authority said it is looking to set a deadline of at least spring 2018 for consumers to lodge complaints about payment protection insurance. Barclays, Lloyds, and Royal Bank of Scotland all rallied on the news.
FirstGroup gained after saying overall trading is in line with management’s expectations and its mult-year transformation plans continue to progress, despite a more challenging trading environment in some of the group’s markets.
Paragon Group advanced after buying Five Arrows Leasing Group through its subsidiary Paragon Bank for £117m.
