London open: FTSE falls as investors eye payrolls report

London stocks fell in early trade on Friday as weak data raised fears about the US economy, and ahead of the release of the all-important non-farm payrolls report.

At 0840 BST, the FTSE 100 was down 0.5% at 8,240.91.

Richard Hunter, head of markets at Interactive Investor, said: "Investor sentiment turned on its head as recessionary fears surfaced, following a slew of corporate and economic data which brought into question whether the Federal Reserve is now behind the curve.

"Initial jobless claims in the US rose by the most in a year, while those claiming benefits jumped to a level not seen since November 2021. In addition, the ISM manufacturing index fell to 46.8%, signalling a contraction while also being worse than the expected figure. Even though Fed Chair Powell signalled earlier in the week that a rate cut was likely in September, the concern is now that the Fed may have missed the boat and that the idyllic economic soft landing will not be achieved.

"In turn, traders began to speculate whether such a cut in September would rise to 0.5% from the previously expected 0.25% in an effort to stem the tide. The changing backdrop puts additional emphasis on the non-farm payrolls report later today, where it is expected that 185,000 jobs will have been added in July, compared to 206,000 the previous month, with unemployment remaining steady at 4.1%. Any notable deviation from these numbers will be market-moving, especially a weak reading which would exacerbate fears of an impending recession."

The payrolls report for July is due at 1330 BST, along with the unemployment rate and average earnings.

In equity markets, IAG flew higher after the BA and Iberia owner said it would start paying dividends again, posted a rise in first-half profits and abandoned its pursuit of Air Europa.

GSK rose as it said the US Food and Drug Administration has approved its Jemperli treatment in combination with chemotherapy and then use on its own for adult patients with primary advanced or recurrent endometrial cancer.

Capita tumbled despite saying it swung to a profit of £60m in the first half from a loss of £67.9m in the same period a year earlier, and backing its full-year expectations.

Market Movers

FTSE 100 (UKX) 8,240.91 -0.51%
FTSE 250 (MCX) 21,161.79 -1.39%
techMARK (TASX) 4,794.99 -0.60%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 165.85p 3.66%
Haleon (HLN) 361.70p 1.03%
Smith & Nephew (SN.) 1,208.50p 0.79%
Unilever (ULVR) 4,819.00p 0.77%
GSK (GSK) 1,537.00p 0.72%
Rio Tinto (RIO) 5,023.00p 0.38%
Intertek Group (ITRK) 4,970.00p 0.32%
Reckitt Benckiser Group (RKT) 4,110.00p 0.29%
Shell (SHEL) 2,832.00p 0.25%
Standard Chartered (STAN) 723.00p 0.22%

FTSE 100 - Fallers

Mondi (MNDI) 1,482.50p -3.83%
Scottish Mortgage Inv Trust (SMT) 822.40p -3.43%
Pershing Square Holdings Ltd NPV (PSH) 3,678.00p -3.11%
Intermediate Capital Group (ICG) 2,072.00p -2.81%
Barclays (BARC) 217.10p -2.60%
3i Group (III) 3,015.00p -2.49%
Beazley (BEZ) 648.00p -2.41%
Airtel Africa (AAF) 110.80p -2.38%
Diploma (DPLM) 4,276.00p -2.37%
Schroders (SDR) 346.20p -2.37%

FTSE 250 - Risers

NCC Group (NCC) 156.40p 7.86%
Primary Health Properties (PHP) 97.50p 4.17%
Me Group International (MEGP) 200.00p 2.88%
Centamin (DI) (CEY) 124.90p 1.38%
Jupiter Fund Management (JUP) 87.20p 1.16%
Baltic Classifieds Group (BCG) 275.00p 0.92%
Endeavour Mining (EDV) 1,674.00p 0.90%
Indivior (INDV) 1,065.00p 0.76%
Hilton Food Group (HFG) 936.00p 0.75%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 83.00p 0.73%

FTSE 250 - Fallers

Allianz Technology Trust (ATT) 355.00p -4.95%
Baillie Gifford Japan Trust (BGFD) 716.00p -4.79%
JPMorgan Japanese Inv Trust (JFJ) 524.00p -4.73%
Polar Capital Technology Trust (PCT) 2,980.00p -4.18%
Edinburgh Worldwide Inv Trust (EWI) 157.40p -3.67%
Bodycote (BOY) 651.00p -3.27%
Softcat (SCT) 1,571.00p -3.20%
Trainline (TRN) 323.40p -2.94%
JTC (JTC) 1,030.00p -2.83%
Paragon Banking Group (PAG) 768.00p -2.78%