London midday: Stocks higher ahead of expected strong US jobs data

Shares of BT and oil stocks lifted the major indices on Friday ahead of the February US jobs report and amid a deluge of domestic economic data that drew a slightly mixed reaction from economists.

As of 1153 GMT the FTSE 100 was up 0.49% or 35.75 points at 7,350.82 and the FTSE 250 was 0.33% ahead or 61.66 points higher to 18,953.30.

The pound was near its recent lows, trading down by 0.14% to $1.2150.

In parallel, crude oil rallied and gold futures retreated, swapping places versus the day before. Front month Brent futures were up by 0.59% to $52.50 a barrel, while gold futures on COMEX were off by 0.51%, dipping below the $1,200/oz level to $1,197.10.

"Given the recent efforts from policy makers, I think the jobs report today will be largely irrelevant when it comes to the discussion on interest rates next week," said Craig Erlam, senior market analyst at OANDA.

"The figures today will literally have to be terrible in order for the Fed to consider postponing a hike that has only been made possible because of their determination that it could happen. The possible credibility cost is great enough that the Fed will not want to disappoint unless it feels it absolutely necessary."

Acting as a backdrop, January industrial output in the UK shrank by 0.4% in comparison to December (consensus: -0.5%) and 3.2% higher in annualised terms (consensus: 3.4%). Manufacturing output was weaker, retreating by 0.9% on the month (consensus: -0.5%) and up by 2.7% on the year (consensus: 3.0%).

Britain's trade deficit in goods and services was unchanged at -£2.0bn for January (consensus: -£3.1bn), but wholly due to the improvement in so-called 'erratic' items, said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

"January’s trade figures should not be interpreted as a sign the UK is enjoying a trade boost from the weaker pound," Tombs added.

Construction output in the UK advanced at a 2.0% year-on-year clip in January, thanks to upwards revisions to data for previous months, easily eclipsing the 0.3% gain which economists had anticipated.

"A decent package of data for the UK economy which are largely supportive for first quarter growth prospects. However, the suspicion remains that the economy will increasingly lose momentum primarily due to consumers limiting their spending growth as their purchasing power is squeezed by higher inflation," said Dr. Howard Archer, chief UK & European economist at IHS Markit.

"Not only do today’s figures add to the evidence that economic growth has maintained a decent pace at the start of the year but they also suggest that growth is starting to become better balanced," said Ruth Gregory, UK economist at Capital Economics.

The US jobs report was set to be published at 1330 GMT.

Market consensus was for the US to have added 190,000 jobs in February after a gain of 227,000 in January and for a dip in the unemployment rate from 4.8% in January to 4.7%, alongside gains of 0.3% month-on-month and 2.8% year-on-year in average hourly earnings.

Friday evening would also bring with it Baker Hughes's latest weekly tally of US oil rigs, which might impact on already tense oil market trading.

BT jumps on Ofcom deal

In UK corporate news, BT Group agreed to legally separate its Openreach infrastructure arm, under pressure from the regulator. The new Openreach will have roughly 32,000 staff transferred from BT, plus its own management, independent board and own logo, but still be within the BT group.

Esure Group was biggest riser in the FTSE 350 as the motor and home insurer said it was now in "full growth mode", with underlying profit surging 20% in 2016 and premiums ahead of expectations.

Amec Foster Wheeler on Friday said it it had won separate contracts in Brunei and Kuwait for undisclosed values.

Bookmaker and gambling operator William Hill announced the appointment of Philip Bowcock as chief executive officer on Friday, with immediate effect.The FTSE 250 company had appointed Bowcock as its interim CEO in July 2016, having previously been chief financial officer of the company.

Property developer Segro has bought the remaining 50% stake in the Airport Property Partnership joint venture it does not
already own from Aviva Group Entities for £365m. The acquisition is to take advantage of the government’s recent decision to build a third runway at Heathrow Airport as the company expects expansion in the medium to long-term for space around the airport.

Market Movers

FTSE 100 (UKX) 7,347.61 0.45%
FTSE 250 (MCX) 18,950.76 0.31%
techMARK (TASX) 3,469.26 0.58%

FTSE 100 - Risers

BT Group (BT.A) 344.95p 4.47%
Micro Focus International (MCRO) 2,203.00p 1.99%
Paddy Power Betfair (PPB) 8,780.00p 1.86%
Glencore (GLEN) 312.10p 1.66%
Intertek Group (ITRK) 3,854.00p 1.61%
Morrison (Wm) Supermarkets (MRW) 234.40p 1.56%
Royal Dutch Shell 'B' (RDSB) 2,214.00p 1.56%
Royal Dutch Shell 'A' (RDSA) 2,120.50p 1.48%
Ashtead Group (AHT) 1,683.00p 1.45%
CRH (CRH) 2,908.00p 1.32%

FTSE 100 - Fallers

WPP (WPP) 1,691.00p -1.80%
Fresnillo (FRES) 1,332.00p -1.70%
Randgold Resources Ltd. (RRS) 6,830.00p -1.51%
Intu Properties (INTU) 278.10p -1.45%
British Land Company (BLND) 614.50p -1.21%
United Utilities Group (UU.) 971.50p -1.17%
Hammerson (HMSO) 583.50p -1.02%
Capita (CPI) 544.50p -0.82%
Marks & Spencer Group (MKS) 336.70p -0.77%
SSE (SSE) 1,513.00p -0.72%

FTSE 250 - Risers

esure Group (ESUR) 239.00p 7.42%
Ferrexpo (FXPO) 145.90p 4.74%
John Laing Group (JLG) 263.00p 4.37%
JRP Group (JRP) 156.50p 4.26%
Kaz Minerals (KAZ) 465.20p 3.72%
Amec Foster Wheeler (AMFW) 487.20p 3.64%
International Personal Finance (IPF) 172.20p 3.55%
Tullow Oil (TLW) 250.60p 3.04%
Cairn Energy (CNE) 210.30p 2.64%
Keller Group (KLR) 919.00p 2.57%

FTSE 250 - Fallers

Aldermore Group (ALD) 225.00p -6.25%
Auto Trader Group (AUTO) 382.50p -4.54%
SEGRO (SGRO) 476.00p -4.15%
Ibstock (IBST) 203.90p -3.78%
Wetherspoon (J.D.) (JDW) 929.00p -3.73%
Domino's Pizza Group (DOM) 335.70p -1.84%
Brown (N.) Group (BWNG) 203.40p -1.74%
Restaurant Group (RTN) 377.80p -1.69%
Derwent London (DLN) 2,709.00p -1.63%
Capital & Counties Properties (CAPC) 286.60p -1.41%