London midday: FTSE slips on dismal data ahead of volatile US payrolls

London's blue chip stocks stumbled by midday on Friday under the weight of a worse UK trade and consumer confidence data, lower oil prices and caution ahead of the looming US non-farm payroll report later in the day.

Having risen in early trading, the FTSE 100 slipped 0.11% to 6,526.90 just before noon, with oil giants Shell and BP creating a drag, while defensives like drugmakers GlaxoSmithKline, AstraZeneca and tobacco giant Imperial Brands ending their recent ascent.

The more UK-focused FTSE 250 was up around 200 points or 1.25% at 16,097.86, as mid-cap housebuilders including Bovis, Bellway, Crest Nicholson and Redrow, as well as banks OneSavings and CYBG all likely benefitted from a little short covering and bargain hunting.

"There appears to be little incentive this morning to drive markets strongly one way or the other ahead of this afternoon’s US payrolls report," said Michael Hewson at CMC Markets. "We do have a slightly firmer tone with the FTSE100 underperforming somewhat due to a weaker oil price, but overall we appear to be in a holding pattern at the end of what has been a fairly turbulent week."

UK trade data from the Office for National Statistics did not seem to add much to help morale in the City. The total trade deficit in goods and services was shown to have widened to £2.3bn in May, which was not as bad as the £3.6bn feared by economists. Exports fell 4.4% month-on-month and imports were down 3.5%. Focusing on visible trade in goods, ONS calculated that the UK's visible trade deficit for May shrank to £9.88bn from the £10.53bn in April, better than the £10.70bn forecast.

Economist Howard Archer of IHS Global Insight forecast UK GDP growth to have come in up 0.5% quarter-on-quarter in the second quarter, but expects this to be "the best performance for some considerable time to come" as the economy then struggles for growth in second half of the year as Brexit uncertainty persists.

An earlier consumer confidence survey, conducted by market researcher Gfk in the wake of the Brexit vote between 30 June and 5 July, recorded the biggest drop in 21 years, with shoppers worried about the economic outlook and inflation. Gfk's headline index dropped eight points to -9, primarily driven by concerns about the economic situation over the next 12 months, which fell to -29 from -14, its lowest level since December 2012, as well as a 12-point decline in consumers’ intent to make major purchases over the next 12 months.

Reflecting on these results, Barclays economists said they now expect households to materially slow their spending in this and coming years, forecasting a significant deceleration in private consumption growth to 2.0% in 2016 and to 0.1% in 2017, from 2.5% in 2015.

There was an unstable mood among investors in Europe and US futures trading, commentators said, ahead of "the mother of all data" the US Non-Farm Payroll report, which is due at 1330 BST.

"Uncertainty and hesitation will be rife today as is typically the case on the first Friday of the month," said Josh Mahony at IG. "The expectation of significant volatility typically sees a changing of guard, with more risk averse short term traders exiting the market as the riskier traders come into play."

He noted that the increased involvement in the markets of algorithmic funds meant that the NFP release has become "an increasingly volatile and liquid affair, with everyone trying to carve out short term gains amid the sharp moves".

"After an absolute shocker last month, the question today is whether we will see a strong recovery for payrolls and what any revision to the May number will look like."

The payroll number is expected to come in at 175,000 and anything off this number could reignite considerable volatility in the market.

However, Ana Thaker, market economist at PhillipCapital, argued that while labour market data is an important release, "Brexit most definitely dominates sentiment and a strong NFP figure is unlikely to change the likelihood of a US rate hike for July".

Company news-wise it was pretty quiet, with Aveva Group a strong riser as it said it could benefit from a potentially sizeable currency gain for the full year due to weakness of sterling since the EU referendum, while also announcing the stepping down of chief executive Richard Longdon after three decades at the data and IT group. The FTSE 250 engineering data and IT provider, which said Longdon would be replaced by chief financial officer James Kidd at the end of 2016, added that trading had remained "satisfactory" in recent weeks.

Fellow mid-cap outfit IG announced that it has appointed Paul Mainwaring as chief financial officer designate. The online trading company said Mainwaring will start on Monday, replacing Mark Ward who will leave the company after a short handover, as previously announced.

Market Movers

FTSE 100 (UKX) 6,524.98 -0.13%
FTSE 250 (MCX) 16,093.50 1.22%
techMARK (TASX) 3,244.12 0.21%

FTSE 100 - Risers

Taylor Wimpey (TW.) 130.80p 7.13%
Barratt Developments (BDEV) 369.90p 5.96%
Dixons Carphone (DC.) 315.50p 5.87%
Persimmon (PSN) 1,407.00p 5.24%
Berkeley Group Holdings (The) (BKG) 2,440.00p 4.99%
Marks & Spencer Group (MKS) 313.80p 4.98%
Hargreaves Lansdown (HL.) 1,192.00p 4.93%
Lloyds Banking Group (LLOY) 52.02p 4.67%
Royal Bank of Scotland Group (RBS) 165.50p 4.35%
Land Securities Group (LAND) 1,004.00p 4.31%

FTSE 100 - Fallers

British American Tobacco (BATS) 4,820.00p -2.58%
Diageo (DGE) 2,111.00p -2.31%
Royal Dutch Shell 'B' (RDSB) 2,079.00p -2.28%
Coca-Cola HBC AG (CDI) (CCH) 1,522.00p -2.06%
Royal Dutch Shell 'A' (RDSA) 2,056.00p -1.96%
Imperial Brands (IMB) 4,012.50p -1.83%
Antofagasta (ANTO) 457.00p -1.66%
BP (BP.) 446.05p -1.60%
AstraZeneca (AZN) 4,530.00p -1.38%
GlaxoSmithKline (GSK) 1,636.00p -1.33%

FTSE 250 - Risers

Bovis Homes Group (BVS) 733.50p 11.14%
OneSavings Bank (OSB) 198.60p 10.89%
Hochschild Mining (HOC) 220.90p 7.91%
Bellway (BWY) 1,859.00p 7.83%
Crest Nicholson Holdings (CRST) 379.90p 7.77%
Aveva Group (AVV) 1,823.00p 6.98%
Debenhams (DEB) 56.70p 6.98%
CYBG (CYBG) 228.90p 6.96%
McCarthy & Stone (MCS) 149.90p 6.84%
Redrow (RDW) 310.40p 6.74%

FTSE 250 - Fallers

Sports Direct International (SPD) 264.00p -5.41%
CLS Holdings (CLI) 1,171.00p -2.42%
Tate & Lyle (TATE) 686.00p -2.21%
Balfour Beatty (BBY) 198.50p -2.17%
Card Factory (CARD) 306.30p -1.76%
Booker Group (BOK) 161.40p -1.53%
AO World (AO.) 140.00p -1.41%
Dechra Pharmaceuticals (DPH) 1,170.00p -1.18%
Cairn Energy (CNE) 205.90p -1.15%
Templeton Emerging Markets Inv Trust (TEM) 522.50p -1.04%