London midday: Stocks tick higher ahead of payrolls
London stocks had ticked a little higher by midday on Friday as investors mulled the latest reading on the UK services sector and looked ahead to the release of the non-farm payrolls report.
The FTSE 100 was up 0.2% at 7,837.21.
Earnings overnight from Amazon, Alphabet and Apple all disappointed, but the top-flight index managed to eke out gains nevertheless.
Russ Mould, investment director at AJ Bell, said: "It helped that Shell was still basking in the glow of its record results and big share buyback announced yesterday. For now, investors seem willing to put any concerns about any longer-term political consequences of the numbers to one side.
"Also supporting the index was weakness in the pound as currency traders bet that we are close to the peak for UK interest rates after yesterday’s meeting in Threadneedle Street. The fact the Monetary Policy Committee was split on the decision to bump rates to 4% felt instructive.
"Futures are pointing towards weakness on Wall Street later, reversing the gains it made before the after-hours shockers from Apple, Amazon and Alphabet, and this will be a test of the FTSE 100’s resilience.
"US jobs numbers are set to be released Friday afternoon with investors looking for a Goldilocks set of figures which are neither so weak they raise the sceptre of a severe recession nor so robust they suggest the jobs market is still running too hot for the Federal Reserve to pursue the hoped-for softening of its stance on interest rates."
The payrolls report is due out at 1330 GMT, along with the unemployment rate and average earnings.
On home shores, a survey out earlier showed that the service sector continued to struggle last month as weaker demand pushed output to a two-year low.
The latest S&P Global/CIPS UK services PMI business activity index came in at 48.7 for January, down from December’s 49.9.
It is the fourth consecutive month the index has remained below the neutral 50.0 threshold. A reading below suggests contraction, while one above indicates growth.
It was, however, also ahead of both consensus and the first estimate, for 48.0, and optimism for the coming year rose as cost pressures eased.
On the corporate front, BT Group was in focus after Ofcom said it was minded to back the company’s planned Openreach wholesale prices, arguing they were not anti-competitive.
The telecoms group informed the regulator in December of its proposed pricing for full-fibre services, known as the Equinox 2 offer. BT wants broadband providers to move from slower copper connections to ultrafast end-to-end fibre, and is offering discounts to encourage the switch.
Ofcom said that having reviewed the proposed offering, including taking into account the interests of customers as well as the impact on competitors and retail broadband providers, its provisional view was that it would not stop Openreach introducing Equinox 2.
Elsewhere, Shell was still a high riser, a day after posting record annual profits.
Retail stocks were on the move after Deutsche Bank put out a note on the sector. B&M European Value Retail was the standout gainer on the FTSE 100 after DB upgraded the shares to ‘buy’ from ‘hold’. Marks & Spencer rose on the back of the same upgrade.
On the downside, however, B&Q owner Kingfisher fell after after Deutsche cut its rating to ‘hold’ from ‘buy’. It also applied the same rating downgrade to Pets at Home, Wickes and Asos.
DB noted that the European general retail sector ended 2022 on a "surprisingly good" note. "Whilst 2023 is unlikely to be a great year for consumers, the outlook is getting noticeably less chilly in our view," it said.
Also in broker note action, Direct Line was cut to ‘underweight’ at Barclays, while IWG was downgraded to ‘equalweight’.
Standard Chartered was upgraded to ‘buy’ at Investec, while Provident Financial was cut to ‘hold’ at Peel Hunt.
Market Movers
FTSE 100 (UKX) 7,837.21 0.22%
FTSE 250 (MCX) 20,491.32 -0.60%
techMARK (TASX) 4,519.40 -0.20%
FTSE 100 - Risers
B&M European Value Retail S.A. (DI) (BME) 489.80p 2.66%
Reckitt Benckiser Group (RKT) 5,746.00p 2.13%
Glencore (GLEN) 554.10p 1.56%
Antofagasta (ANTO) 1,745.00p 1.51%
Fresnillo (FRES) 820.20p 1.36%
Smith & Nephew (SN.) 1,165.00p 1.35%
Shell (SHEL) 2,365.50p 1.20%
Rio Tinto (RIO) 6,135.00p 1.17%
Diageo (DGE) 3,588.00p 1.17%
BT Group (BT.A) 133.80p 1.06%
FTSE 100 - Fallers
Persimmon (PSN) 1,475.00p -3.66%
SEGRO (SGRO) 892.40p -3.02%
Centrica (CNA) 95.40p -2.83%
Taylor Wimpey (TW.) 123.50p -2.37%
Berkeley Group Holdings (The) (BKG) 4,344.00p -2.21%
Barratt Developments (BDEV) 474.30p -2.02%
Vodafone Group (VOD) 92.99p -1.95%
CRH (CDI) (CRH) 3,866.00p -1.82%
Scottish Mortgage Inv Trust (SMT) 791.00p -1.79%
Experian (EXPN) 3,111.00p -1.55%
FTSE 250 - Risers
Virgin Money UK (VMUK) 192.20p 2.29%
Paragon Banking Group (PAG) 588.00p 2.08%
Tullow Oil (TLW) 35.38p 2.02%
Network International Holdings (NETW) 285.80p 1.56%
Indivior (INDV) 1,929.00p 1.26%
888 Holdings (DI) (888) 74.50p 1.15%
Balfour Beatty (BBY) 367.00p 1.10%
GCP Infrastructure Investments Ltd (GCP) 98.90p 1.02%
JPMorgan Japanese Inv Trust (JFJ) 504.00p 1.00%
Wetherspoon (J.D.) (JDW) 506.00p 1.00%
FTSE 250 - Fallers
IWG (IWG) 185.35p -6.25%
ASOS (ASC) 938.50p -4.43%
Bakkavor Group (BAKK) 112.80p -3.59%
Baltic Classifieds Group (BCG) 145.00p -3.33%
Hunting (HTG) 328.00p -3.24%
Allianz Technology Trust (ATT) 231.00p -3.14%
Helios Towers (HTWS) 108.10p -3.05%
Marshalls (MSLH) 355.60p -3.00%
Urban Logistics Reit (SHED) 149.00p -2.93%
Syncona Limited NPV (SYNC) 175.40p -2.77%