London midday: FTSE drifts lower ahead of payrolls

London stocks were still a little lower by midday on Friday as investors eyed the release of the latest US non-farm payrolls report.

The FTSE 100 was down 0.3% at 7,673.36.

Stocks in the US closed higher on Thursday after Federal Reserve chair Jerome Powell signalled in remarks to the Senate Banking Committee that interest rates may be cut soon.

Responding to a question about rates and inflation, he said: "We’re waiting to become more confident that inflation is moving sustainably at 2%. When we do get that confidence, and we’re not far from it, it’ll be appropriate to begin to dial back the level of restriction."

Looking ahead to the rest of the day, the focus will shift to the payrolls report, unemployment rate and average earnings, all due at 1330 GMT.

Kathleen Brooks, research director at XTB, said: "The market is expecting a 200k increase in payrolls for last month, the unemployment rate is expected to remain steady at 3.7%, and average hourly earnings are expected to moderate and rise 0.2% on the month, down from a 0.6% growth rate in January, and the annual rate is expected to moderate to 2.4% from 4.5%.

"This data is worth watching. If the data comes in line with expectations, or below forecasts, this would be seen as a positive development with the potential for Treasury yields to fall (bond prices to rally) and stocks to continue to rally, and the dollar to fall. If there is an upside surprise, then risk sentiment may falter. Overall, we expect markets to remain fairly quiet in the lead up to the payrolls report."

In equity markets, there was more deal news for investors to sink their teeth into after packaging firm Mondi agreed to buy smaller rival DS Smith for £5.1bn. In a joint statement after the close on Thursday, the companies said the agreement in principle has an implied value of 373p per DS Smith share, which is a premium of 33% to the closing share price on Thursday.

DS Smith was firmly in the black but Mondi shares were trading lower. Smurfit Kappa also gained.

Informa advanced as it upped 2024 guidance after strong growth in overseas markets boosted full-year revenues and profits.

Just Group surged to the top of the FTSE 250 after saying it now expects to achieve its target of doubling profits in three years instead of the originally-intended five.

Mike Ashley’s Frasers Group fell as it confirmed the closure of Matchesfashion after just two months of ownership.

Currys was also a little weaker after it said Greek regulators had approved the sale of its Greece and Cyprus retail business Kotsovolos to Public Power Corporation for an enterprise value of €200m (£175m).

In broker note action, PZ Cussons was under the cosh after Barclays downgraded shares of the Imperial Leather maker to ‘equalweight’ from ‘overweight’. However, Irn-Bru maker AG Barr fizzed higher after an upgrade to ‘equalweight’ from ‘underweight’ by the same outfit.

Spirax-Sarco was hit by a downgrade to ‘sell’ from ‘hold’ at Stifel.

Outside the FTSE 350, Petrofac gushed higher after it was awarded a $200m, three-year operations contract from Turkemengas at the Galkynysh Gas Field, in Turkmenistan.

Elsewhere, wealth manager Mattioli Woods rocketed after agreeing to be bought by private equity firm Pollen Street Capital in a £432m deal.

Market Movers

FTSE 100 (UKX) 7,673.36 -0.25%
FTSE 250 (MCX) 19,514.67 -0.35%
techMARK (TASX) 4,512.37 -0.58%

FTSE 100 - Risers

Smith (DS) (SMDS) 345.50p 6.24%
Convatec Group (CTEC) 283.00p 2.69%
Smurfit Kappa Group (CDI) (SKG) 3,356.00p 1.82%
Legal & General Group (LGEN) 248.00p 1.31%
Glencore (GLEN) 404.10p 1.25%
SEGRO (SGRO) 890.00p 1.09%
Reckitt Benckiser Group (RKT) 5,138.00p 1.06%
Compass Group (CPG) 2,174.00p 1.02%
Aviva (AV.) 466.90p 1.02%
NATWEST GROUP (NWG) 252.90p 1.00%

FTSE 100 - Fallers

Melrose Industries (MRO) 591.40p -4.21%
Rentokil Initial (RTO) 486.60p -3.49%
Entain (ENT) 763.00p -3.42%
Spirax-Sarco Engineering (SPX) 10,335.00p -3.05%
Ocado Group (OCDO) 446.10p -2.66%
St James's Place (STJ) 470.00p -2.27%
Ashtead Group (AHT) 5,020.00p -2.07%
Mondi (MNDI) 1,352.50p -1.99%
Fresnillo (FRES) 468.50p -1.91%
Barratt Developments (BDEV) 468.90p -1.70%

FTSE 250 - Risers

Just Group (JUST) 100.00p 12.11%
Darktrace (DARK) 385.70p 3.21%
ITV (ITV) 70.04p 2.43%
Hipgnosis Songs Fund Limited NPV (SONG) 62.40p 2.30%
North Atlantic Smaller Companies Inv Trust (NAS) 3,700.00p 1.37%
IWG (IWG) 180.10p 1.24%
Allianz Technology Trust (ATT) 358.50p 0.99%
Oxford Instruments (OXIG) 2,225.00p 0.91%
Sirius Real Estate Ltd. (SRE) 89.35p 0.90%
Balanced Commercial Property Trust Limited (BCPT) 79.60p 0.89%

FTSE 250 - Fallers

Close Brothers Group (CBG) 371.40p -4.72%
Future (FUTR) 598.00p -4.70%
Harbour Energy (HBR) 257.40p -4.63%
Watches of Switzerland Group (WOSG) 374.60p -3.50%
Ibstock (IBST) 147.70p -2.44%
Genus (GNS) 1,796.00p -2.34%
Indivior (INDV) 1,678.00p -2.33%
PZ Cussons (PZC) 94.00p -2.29%
Plus500 Ltd (DI) (PLUS) 1,728.00p -2.15%
4Imprint Group (FOUR) 5,630.00p -2.09%