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London open: Stocks edge lower ahead of NFP but Intu surges
London stocks edged lower in early trade on Friday as investors eyed the release of the latest US non-farm payrolls report and continued to keep an eye on the US bond market.
At 0830 BST, the FTSE 100 was down 0.3% to 7,399.70, while the pound was up 0.2% against the dollar at 1.3049 and 0.3% firmer versus the euro at 1.1345 following reports that Brexit negotiators see a divorce deal as being very close.
The UK and EU were inching closer to a deal on a backstop solution for the Irish border that would break the impasse in Brexit talks, The Times reported, while Reuters revealed that EU negotiators had told national diplomats in Brussels late on Thursday that a divorce deal with Britain was “very close”.
Traders and analysts were still very much focused on yields, with CMC Markets analyst Michael Hewson saying this week’s surge in US 10-year yields to their highest levels since 2011 “could gain further traction” in the event of a decent US jobs report later.
“Having seen the ADP payrolls report post 230,000 new jobs in September, and seeing the latest ISM non-manufacturing survey post a big gain in the employment component, expectations have risen that we could well see a payrolls figure in excess of 200,000, raising the expectations that September could well see the two reports combined post a figure close to 500,000.”
The payrolls report, unemployment rate and average earnings are due at 1330 BST. Consensus is for 185,000 jobs to have been added in September, down from 201,000 the month before, while the unemployment rate is expected to have ticked down to 3.8% from 3.9% in August.
In UK corporate news, Intu Properties bucked the trend, surging nearly 25% as it emerged that one of the company’s senior directors is leading a consortium of investment companies to buy the shopping centre owner. Deputy chairman John Whittaker’s Peel Group has teamed up with Saudi conglomerate Olayan Group and Canary Wharf owner Brookfield Property Group to launch possible offer for Intu.
British Land, Land Securities, Hammerson and Capital & Counties all rallied on the news.
Unilever edged higher as the company said its directors have decided to withdraw their proposal to move out of the UK to a single Netherlands headquarters after growing opposition from shareholders large and small.
Greencoat UK Wind nudged up after announcing the acquisition of Belltown Power’s 75% stake in Scotland’s Tom nan Clach wind farm for £126m.
Centamin lost ground after the gold miner cut its full-year production target as it posted a drop in quarterly output.
Real estate investment trust Assura was in the red as it said it had completed a further three acquisitions for £50m, taking its total spend for the year to £158m.
In broker note action, Antofagasta was hit by a downgrade to ‘sell’ at Goldman Sachs, while Bodycote was lifted to ‘buy’ at HSBC and Intertek was boosted to ‘buy’ by Berenberg.
Rentokil was upgraded to ‘buy’ at Stifel and Royal Mail was cut to ‘sell’ at Citi. CLS Holdings was started at ‘buy’ by Berenberg, while CYBG and Metro Bank were initiated at ‘sell’ and ‘buy’ respectively by Societe Generale.
