London midday: Stock gains cut as oil prices tank; payrolls eyed

London's FTSE 100 was easing back from a fresh intraday high by midday on Friday, with weaker oil prices offsetting a stronger-than-expected reading on the UK construction sector, as investors eyed the release of the latest non-farm payrolls report.

The FTSE 100 was up 0.4% to 7,570.08, slipping back from the fresh intraday high of 7,598.99 hit earlier despite an encouraging data release.

A survey published by Markit showed UK construction activity improved much more than expected in May. The Markit/CIPS UK construction purchasing managers' index jumped to 56.0, a 17-month high, rebounding from 53.1 when the market had expected it to fall to 52.6.

Helping the index was the fastest upturn in residential building work since the end of 2015, Markit said, as well as a recovery in new work after a soft first quarter.

Survey respondents cited a strong pipeline of new development projects and resilient underlying demand, while others reported solid rises in civil engineering and commercial building.

Meanwhile, the pound was down 0.3% to 1.2852 as the latest poll from Ipsos Mori showed that the Tories’ lead over Labour has shrunk to five points from 15 points just over two weeks ago.

Slumping oil prices were limiting the Footsie's gains, with West Texas Intermediate and Brent crude down 3% to $46.94 a barrel and $49.15, respectively, hit by US President Trump’s decision to remove America from the Paris climate agreement, which has prompted concerns that the country will ramp up its drilling, cancelling out any output cap implemented by OPEC.

Looking ahead to the rest of the day, the highlight will be the release of the non-farm payrolls report and unemployment rate at 1330 BST, particularly after Thursday’s ADP employment report showed the US private sector added 253,000 jobs in May, comfortably surpassing expectations for a 185,000 gain. The consensus forecast is for an increase of 186,000 in the payrolls.

IG analyst Joshua Mahony said: “Market expectations have the chances of a rate hike at 100%, which has been firmed up even further by yesterday’s substantial rise in the private ADP payrolls figure. Gone are the days where a rate hike sends shivers through the market, and instead the emphasis is on stability and certainty, which is what markets believe they have when it comes to this month’s Fed meeting.”

On the corporate front, satellite communications provider Inmarsat racked up healthy gains after it said it had ordered a new high-speed broadband satellite after winning a major contract with Qatar Airways, although there was no news regarding the takeover speculation that emerged earlier in the week.

GlaxoSmithKline was also in the black after it and its majority-owned specialist HIV company ViiV Healthcare, which is also held by Pfizer and Shionogi as shareholders, announced regulatory submissions to the European Medicines Agency (EMA) and US Food and Drug Administration (FDA) for a single-tablet, two-drug regimen of dolutegravir and rilpivirine, for the maintenance treatment of HIV-1 infection.

Metro Bank advanced after saying it has completed the purchase of a portfolio of UK mortgages from Cerberus European Residential Holdings B.V. for £ 596.7m.

EasyJet was boosted by a positive note from HSBC, which upped its price target on the airline to 1,550p from 1,450p saying it expects evidence of the business’s recovery to build into the summer. British Airways parent International Consolidated Airlines Group was also trading higher.

Acacia Mining shares rose as the company said it hopes to speak to the Tanzanian government in the coming days to resolve a dispute in which the gold miner was accused of under-reporting the amount of gold it was exporting.

On the downside, Whitbread was hit by a downgrade to ‘sell’ at Goldman Sachs, while B&M European Value Retail fell after a private equity backer and the family investment vehicle of chief executive Simon Arora and his brothers offloaded £454.3m worth of shares in the discounter.

Market Movers

FTSE 100 (UKX) 7,570.08 0.35%
FTSE 250 (MCX) 20,024.48 0.07%
techMARK (TASX) 3,664.22 0.28%

FTSE 100 - Risers

Old Mutual (OML) 195.00p 2.25%
International Consolidated Airlines Group SA (CDI) (IAG) 613.50p 1.91%
Carnival (CCL) 5,130.00p 1.89%
Standard Chartered (STAN) 758.30p 1.81%
Convatec Group (CTEC) 336.00p 1.57%
Royal Bank of Scotland Group (RBS) 262.70p 1.47%
Ashtead Group (AHT) 1,618.00p 1.44%
HSBC Holdings (HSBA) 686.20p 1.37%
Diageo (DGE) 2,375.00p 1.37%
Coca-Cola HBC AG (CDI) (CCH) 2,323.00p 1.31%

FTSE 100 - Fallers

Antofagasta (ANTO) 803.50p -1.71%
Taylor Wimpey (TW.) 187.10p -1.53%
Anglo American (AAL) 1,018.50p -1.50%
Whitbread (WTB) 4,235.00p -1.47%
Marks & Spencer Group (MKS) 370.10p -1.39%
Next (NXT) 4,349.00p -1.16%
Intu Properties (INTU) 274.00p -1.15%
British Land Company (BLND) 633.50p -1.09%
United Utilities Group (UU.) 1,012.00p -0.98%
Hammerson (HMSO) 587.50p -0.84%

FTSE 250 - Risers

Acacia Mining (ACA) 295.20p 4.13%
Kaz Minerals (KAZ) 503.00p 3.09%
Dechra Pharmaceuticals (DPH) 1,954.00p 2.79%
Rathbone Brothers (RAT) 2,659.00p 2.35%
Greencore Group (GNC) 247.20p 2.28%
Metro Bank (MTRO) 3,798.00p 2.12%
Cranswick (CWK) 3,017.00p 1.93%
IWG (IWG) 350.20p 1.83%
Petrofac Ltd. (PFC) 382.30p 1.78%
Paragon Group Of Companies (PAG) 466.20p 1.72%

FTSE 250 - Fallers

B&M European Value Retail S.A. (DI) (BME) 359.20p -3.02%
Tullow Oil (TLW) 181.00p -2.69%
Polymetal International (POLY) 975.00p -2.30%
Ferrexpo (FXPO) 172.40p -2.27%
Evraz (EVR) 189.80p -2.16%
Vedanta Resources (VED) 608.50p -2.01%
Grafton Group Units (GFTU) 780.50p -1.76%
Nostrum Oil & Gas (NOG) 509.50p -1.74%
Derwent London (DLN) 2,675.00p -1.65%
AO World (AO.) 142.80p -1.52%