London midday: FTSE maintains gains ahead of payrolls; Aviva surges

London stocks were still in the black by midday on Friday as investors eyed the latest non-farm payrolls report for clues on the outlook for US interest rates, with Aviva surging ahead on bid speculation.

The FTSE 100 was up 0.4% at 7,482.46.

Russ Mould, investment director at AJ Bell, said: "A slowdown in US jobs growth is expected to be the talking point of the day when new figures are released.

"Nonfarm payrolls are expected to have increased by 170,000 last month, down from 187,000 in August and continuing a trend of sub-200,000 monthly gains. While the slowdown is notable, achieving such a figure would not be disastrous and so the market is likely to take the view that the economy is still resilient and interest rates will stay higher for longer.

"European equity markets were robust at the end of the trading week, including a 0.3% rise in the FTSE 100. Driving the UK blue chip index higher was M&A chatter around Aviva which gave a lift to multiple stocks in the financial sector. Miners were also in demand despite copper having a terrible week, down approximately 4% over five days. Copper inventory levels have been climbing while dollar strength is typically negative for commodity prices."

The payrolls report, unemployment rate and average earnings are all due at 1330 BST.

On home shores, investors were digesting the latest data from Halifax, which showed that house prices fell again in September as high borrowing costs continued to dent the market.

House prices declined by 4.7% on the year, following a 4.5% drop in August. On a month-on-month basis, house prices were down 0.4% in September following a 1.8% decline the month before.

The average price of a home now stands at £278,601, which is around the level seen in early 2022.

Kim Kinnaird, director of Halifax Mortgages, said: "Activity levels continue to look subdued compared to recent years, with industry data showing lower levels of new instructions to sell homes and agreed sales. Borrowing costs are the primary factor, given the impact of higher interest rates on mortgage affordability. Against this backdrop, homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market.

"However, with Base Rate now likely to be at or around its peak, we are seeing fixed rate mortgages deals ease back from recent highs. Wage growth also remains strong, which has helped with affordability, with the house price to income ratio now at its lowest level since June 2020 (6.2 in September versus 6.3 in August)."

Last month, the Bank of England stood pat on interest rates for the first time in nearly two years, at 5.25%.

Elsewhere, industry research out earlier showed that retail footfall eased in September as the unseasonably warm weather put off shoppers.

According to the latest BRC-Sensormatic IQ Monitor, total UK footfall decreased by 2.9% year-on-year in the five weeks to 30 September, further adding to August’s 1.9% decline.

Within that, footfall on high streets fell by 1.7% and by 2.4% in retail parks. The heaviest fall was seen in shopping centres, where footfall was 4% lower year-on-year.

Helen Dickinson, chief executive of the British Retail Consortium, said: "During the warmer-than-expected weather, footfall slowed in September, with fewer shoppers across all locations.

"High streets and retail parks held up slightly better as the returns to school helped increase the number of shopping visits at the start of the month."

In equity markets, Aviva jumped after markets blog Betaville suggested in one of its ‘uncooked’ alerts that the insurance group was at the centre of takeover talk.

Betaville said the identity of the company circling Aviva was unclear but noted that previous reports have pointed to German insurance group Allianz, French insurance giant Axa, Canada's Intact Financial Group and Scandinavian firm Tryg.

Legal & General and Prudential also rose.

Pub chain JD Wetherspoon advanced after saying it swung to a full-year profit as sales rose by over a tenth, though underlying growth has eased somewhat in the first quarter of the new financial year.

Shell gained after the oil giant said its earnings from gas trading bounced back in the third quarter.

Man Group rallied after an upgrade to ‘outperform’ at Exane BNP, but Rentokil slumped after an initiation at ‘sell’ at Societe Generale.

Market Movers

FTSE 100 (UKX) 7,482.46 0.41%
FTSE 250 (MCX) 17,718.31 0.67%
techMARK (TASX) 4,081.22 0.09%

FTSE 100 - Risers

Aviva (AV.) 424.60p 9.35%
Legal & General Group (LGEN) 220.00p 4.56%
Prudential (PRU) 881.00p 3.02%
Melrose Industries (MRO) 460.00p 2.82%
Beazley (BEZ) 547.50p 2.72%
Phoenix Group Holdings (PHNX) 469.10p 2.38%
CRH (CDI) (CRH) 4,576.00p 2.23%
Halma (HLMA) 1,979.50p 2.14%
Hargreaves Lansdown (HL.) 772.80p 1.90%
M&G (MNG) 195.15p 1.88%

FTSE 100 - Fallers

Coca-Cola HBC AG (CDI) (CCH) 2,124.00p -2.70%
Rentokil Initial (RTO) 588.20p -2.49%
Unilever (ULVR) 3,958.50p -1.79%
Reckitt Benckiser Group (RKT) 5,736.00p -1.44%
Compass Group (CPG) 2,018.00p -1.22%
Haleon (HLN) 332.80p -1.03%
British American Tobacco (BATS) 2,488.50p -0.80%
National Grid (NG.) 941.80p -0.61%
Diageo (DGE) 3,037.00p -0.61%
Severn Trent (SVT) 2,298.00p -0.43%

FTSE 250 - Risers

Man Group (EMG) 231.10p 5.24%
Direct Line Insurance Group (DLG) 166.50p 3.29%
Diversified Energy Company (DEC) 73.95p 3.21%
Bank of Georgia Group (BGEO) 3,510.00p 3.08%
PureTech Health (PRTC) 182.40p 2.59%
Computacenter (CCC) 2,550.00p 2.41%
AJ Bell (AJB) 264.00p 2.40%
Future (FUTR) 868.00p 2.30%
TP Icap Group (TCAP) 161.00p 2.29%
Templeton Emerging Markets Inv Trust (TEM) 147.20p 2.22%

FTSE 250 - Fallers

Spirent Communications (SPT) 89.70p -4.37%
Wetherspoon (J.D.) (JDW) 669.50p -3.88%
Ceres Power Holdings (CWR) 278.20p -2.32%
Volution Group (FAN) 358.40p -1.81%
Safestore Holdings (SAFE) 729.00p -1.75%
Britvic (BVIC) 821.50p -1.62%
Drax Group (DRX) 403.70p -1.10%
Ferrexpo (FXPO) 74.80p -1.06%
Playtech (PTEC) 400.80p -1.04%
Marshalls (MSLH) 232.80p -0.94%