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London open: FTSE flat ahead of non-farm payrolls
London stocks were steady in early trade on Friday as investors eyed the release of the latest US non-farm payrolls report.
At 0840 GMT, the FTSE 100 was flat at 8,316.10.
There are no major UK data releases due, but in the US the non-farm payrolls report for November is scheduled for release at 1330 GMT, along with the unemployment rate and average earnings.
Kathleeen Brooks, research director at XTB, said: “The December payrolls report is expected to show a sharp reduction in jobs growth at the end of 2024. Analysts are expecting a 165k increase in payrolls, this compares to a 227k increase for November. Private sector payrolls are also expected to moderate and grow by 140k, versus 194k in November. The unemployment rate is expected to remain steady at 4.2%, the highest level since August, and average hourly earnings are expected to stay at a 4% annual rate.
“Although jobs growth is expected to moderate, there are still pockets of strength in the labour market that could be inflationary. This is why the average earnings data is also a vital piece of information for this report. Monthly average hourly earnings data has been trending higher in recent months, compared with earlier in 2024. Although annual wage growth has been stable, the monthly figure could suggest that there is upward pressure brewing for wage inflation down the line.
“A moderation in jobs growth, yet elevated monthly inflation growth could make this report hard to decipher. On the one hand a softening labour market supports further easing from the Federal Reserve, on the other hand, stronger wage growth supports a high bar for future cuts.”
Brooks said that if there is a large upward surprise in the payrolls report, there could be a further reduction in market expectations of future rate cuts from the Fed.
“In November there was a large upward surprise for payrolls, however, in recent months there has been some distortion to the figures due to adverse weather in October,” she said.
“A more convincing argument for an upward surprise to payrolls is the strength of the US economy. The Atlanta Fed’s GDPNow tool is predicting a 2.9% annual rate for GDP for Q4.”
In equity markets, Sainsbury’s lost ground as the supermarket chain said it would increase wages by 5% after bumper sales in its key Christmas quarter.
Sales over the four weeks to 4 January rose 3.8%, and Sainsbury’s said it expected annual underlying retail operating profit to increase 7% at the mid-point of its £1.01bn – £1.06bn guidance range.
Third-quarter underlying sales rose 2.8%, with grocery up 4.1% and general merchandise and clothing down 0.1%. The Argos business was 1.4% lower during the period.
Elsewhere, shipping services firm Clarkson rallied as it said results for the year to the end of December 2024 were set to be “slightly ahead” of current market expectations.
The company now expects underlying pre-tax profit to be “not less than” £115m. This compares to £109.2m in the year to the end of December 2023.
In broker note action, Reckitt was boosted by an upgrade to ‘overweight’ by Morgan Stanley, while InterContinental Hotels was higher after an upgrade ‘market perform’ at Bernstein.
Persimmon was in the black as UBS upgraded its stance on the housebuilder to ‘buy’.
Haleon was knocked lower by a downgrade to ‘equalweight’ at Morgan Stanley, while Serco fell after a downgrade to ‘hold’ from ‘buy’ at Jefferies.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Reckitt Benckiser Group Plc | +2.38% | +117.00 | 5,040.00 |
| 2 |  |
Barratt Redrow Plc | +1.36% | +5.50 | 410.90 |
| 3 |  |
Wpp Plc | +1.34% | +9.80 | 741.80 |
| 4 |  |
Anglo American Plc | +1.15% | +28.00 | 2,467.50 |
| 5 |  |
Bp Plc | +0.95% | +4.00 | 426.70 |
| 6 |  |
Rio Tinto Plc | +0.77% | +37.00 | 4,843.00 |
| 7 |  |
South32 Limited | +0.77% | +1.30 | 170.50 |
| 8 |  |
Intercontinental Hotels Group Plc | +0.63% | +62.00 | 9,950.00 |
| 9 |  |
Wise Plc | +0.63% | +7.00 | 1,124.00 |
| 10 |  |
Smurfit Westrock Plc | +0.61% | +26.00 | 4,266.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Sainsbury (j) Plc | -2.20% | -5.80 | 257.40 |
| 2 |  |
Haleon | -1.62% | -6.20 | 376.70 |
| 3 |  |
Tesco Plc | -1.47% | -5.40 | 362.60 |
| 4 |  |
Bt Group Plc | -1.22% | -1.75 | 141.70 |
| 5 |  |
Rentokil Initial Plc | -1.11% | -4.30 | 383.20 |
| 6 |  |
Diageo Plc | -1.10% | -28.00 | 2,527.00 |
| 7 |  |
Prudential Plc | -1.03% | -6.40 | 614.40 |
| 8 |  |
International Consolidated Airlines Group S.a. | -0.93% | -2.90 | 309.90 |
| 9 |  |
Smith (ds) Plc | -0.79% | -4.50 | 563.00 |
| 10 |  |
Intertek Group Plc | -0.78% | -38.00 | 4,810.00 |
Friday newspaper round-up: Energy bills, ticket touting, BlackRock
The number of people in England and Wales who sought help with energy bills jumped by 20% last year, according to Citizens Advice, which assisted 60,000 households struggling with the soaring cost of gas and electricity. That number was double the figure for 2020, the national consumer advice charity said, with problems with billing being the single most common type of issue raised with its service providers. – Guardian
The price at which tickets for live events can be resold is to be capped under “gamechanging” proposals put forward by the government to crack down on touting in the sector. In a move hailed by music industry figures, the culture minister, Lisa Nandy, has launched a consultation that she said would end the “misery” of fans being exploited by touts, some of whom have made huge profits by selling hundreds of tickets a year. – Guardian
More than 100 earthquakes that damaged households across Surrey were likely caused by fracking, according to a landmark study by the University College London (UCL). As part of their findings, researchers suggested that oil extraction from a Surrey well led to powerful tremors across various villages in 2018-19, including Newdigate and Charlwood – which lie just four miles from Gatwick Airport. – Telegraph
BlackRock, the world’s biggest asset manager, is abandoning an influential net-zero alliance after coming under pressure from Republican politicians over its support for “woke” climate policies. The New York-headquartered firm, which manages $11.5 trillion of assets, said it would leave the Net Zero Asset Managers initiative. Members of the group pledge to support the goal of net-zero greenhouse gas emissions by 2050, including by using their votes on behalf of shareholders at corporate meetings. – The Times
The increase in employers’ national insurance contributions will result in an overall slowing of wage growth in the long run, a deputy governor of the Bank of England has said. Sarah Breeden, who is in charge of financial stability at the Bank, said she no longer feared a resurgence in consumer price inflation this year as the economy has slowed, the labour market has cooled and government tax changes to NICs could push down on earnings growth. – The Times
