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London open: Stocks edge lower ahead of payrolls; miners slump
London stocks edged lower in early trade on Friday as investors eyed the release of the latest US non-farm payrolls report, with miners under pressure.
At 0820 BST, the FTSE 100 was down 0.2% at 7,588.11, while the pound was flat against the dollar at 1.2577 and 0.1% firmer versus the euro at 1.1156.
CMC Markets analyst Michael Hewson said: “Today’s US payrolls report has the potential to upset the apple cart when it comes to whether or not we can expect to see a Fed rate cut later this month, and if we do whether it will be 25 or 50 basis points.
“Currently market pricing is at a 100% certainty that we will get some form of move from the FOMC when they meet at the end of this month, despite data that while by and large is a little softer, isn’t screaming economic slowdown.”
The payrolls report is due at 1330 BST, along with the unemployment rate and average earnings.
The payrolls are expected to show a 160,000 increase in June, compared to a 75,000 jump the month before, while average hourly earnings are expected to have edged up 3.2% versus 3.1% in May and the unemployment rate is forecast to be unchanged at 3.6%.
In equity markets, miners were under the cosh amid falling iron ore and copper prices. Iron ore prices took a hit on news that China’s top mills have formed a group to investigate whether “non-market factors” are causing the surge in prices. They are said to have called on the government to maintain market stability. Rio Tinto, Anglo American, Antofagasta, Glencore and BHP were all weaker.
Building materials supplier SIG suffered heavy losses as it said weak construction markets in the UK and Ireland led to a 3.8% fall in first half like-for-like sales. Broker Liberum said it still sees upside in SIG shares as margins improve, “but we may need to see stabilising like-for-likes before shares perform better”.
Ferrexpo was also in the red even as it reported a 5% increase in first-half iron pellet production and reiterated its full-year guidance.
Spectris shares were under the cosh after Bank of America Merrill Lynch double-downgraded its recommendation to ‘underperform’.
Outside the FTSE 350, aviation services business John Menzies saw its shares tumble after it warned over its full-year earnings, pointing to challenges in the wider aviation market such as weak cargo volumes and flight reductions.
British Airways and Iberian parent IAG was flying high as it reiterated that it is no longer interested in Norwegian air. The statement followed a Spanish media report suggesting that IAG was planning to make an offer for the airline.
