London open: Stocks edge up on US-Mexico hopes; payrolls in focus

London stocks edged higher in early trade on Friday, taking their cue from a positive close on Wall Street amid rate cut hopes and optimism over trade talks between the US and Mexico, as investors eyed the release of the latest non-farm payrolls report.

At 0820 BST, the FTSE 100 was 0.3% higher at 7,280.97, while the pound was up 0.1% against the dollar at 1.2706 and 0.2% firmer versus the euro at 1.1279.

London Capital Group analyst Jasper Lawler said: "The prospect of some good news over trade turned US financial markets around. Asia followed suit and European bourses are pointing to a stronger start on the open.

"There is a good chance that the markets are getting ahead of themselves here. History tells us that there have only been a limited number of occasions where Trump hasn’t stuck to his word over a trade tariff threat. Mexico is pushing for more time but we are less convinced than the markets that Trump will grant it."

Senior officials from both countries said on Thursday that they were discussing significant changes in asylum rules and border enforcement that could stop President Trump from imposing tariffs on all Mexican imports.

All eyes will be on the US non-farm payrolls report, unemployment report and average earnings at 1330 BST. The report is expected to show that 175,000 jobs were added in May, down from 263,000 in April. The unemployment rate is expected to remain steady at 3.6%, while average hourly earnings are forecast to tick higher to 0.3% month-on-month from 0.2% in April.

"In some ways this NFP figure will be a gateway for the heightened expectations of a US rate cut," Lawler said. "The near-term direction for the markets depends on whether the gate is open or shut. Should the NFP disappoint expectations of a Fed cut potentially as soon as June or July could rise."

In equity markets, iron ore pellet producer Ferrexpo rallied as it said group first half EBITDA was expected to increase "materially" due to higher prices and sales.

Games Workshop was also a high riser as it said sales and profit growth extended to the end of its financial year as it reiterated guidance for annual results. Sales for the year to 2 June will be about £254m and pre-tax profit will be at least £80m, versus profit of £74.55m a year earlier.

GlaxoSmithKline nudged up after it received approval from the US Food and Drug Administration for two new methods for administering Nucala, a drug initially developed for maintenance treatment for patients with severe eosinophilic asthma.

Smiths Group rose after appointing JehanZeb Noor as chief executive officer of its medical division with effect from 1 July. He will oversee the separation of the business.

AJ Bell was in the red after Invesco Asset Management sold 38 million shares - a 9.3% stake - in the business for £144.4m.

In broker note action, 888 was boosted by an upgrade to 'overweight' at JPMorgan, while Ascential was up after an initiation at 'outperform' by Macquarie.

Sage was the worst performer on the FTSE 100 after a downgrade to 'sell' at Deutsche Bank, Rio Tinto was a little weaker after a downgrade to 'underweight' at Barclays and Royal Mail was knocked lower by a downgrade to 'hold' at HSBC. Pets at Home was also on the back foot after a downgrade to 'hold' at HSBC.

Market Movers

FTSE 100 (UKX) 7,280.97 0.29%
FTSE 250 (MCX) 19,093.69 0.15%
techMARK (TASX) 3,529.33 -0.10%

FTSE 100 - Risers

Burberry Group (BRBY) 1,767.00p 1.23%
Rightmove (RMV) 577.50p 1.17%
Carnival (CCL) 3,871.00p 1.04%
Ashtead Group (AHT) 1,936.50p 1.02%
British American Tobacco (BATS) 2,944.50p 0.99%
BP (BP.) 548.85p 0.98%
Hargreaves Lansdown (HL.) 1,916.00p 0.84%
Royal Dutch Shell 'B' (RDSB) 2,535.00p 0.74%
Rentokil Initial (RTO) 374.70p 0.73%
Evraz (EVR) 624.00p 0.71%

FTSE 100 - Fallers

Sage Group (SGE) 739.40p -2.09%
Marks & Spencer Group (MKS) 221.70p -0.81%
Rio Tinto (RIO) 4,505.50p -0.73%
International Consolidated Airlines Group SA (CDI) (IAG) 467.00p -0.70%
BT Group (BT.A) 199.95p -0.62%
United Utilities Group (UU.) 824.80p -0.58%
Persimmon (PSN) 2,011.00p -0.54%
Morrison (Wm) Supermarkets (MRW) 194.90p -0.54%
Severn Trent (SVT) 2,037.00p -0.44%
Compass Group (CPG) 1,818.00p -0.44%

FTSE 250 - Risers

Ferrexpo (FXPO) 249.00p 4.27%
888 Holdings (888) 159.97p 3.67%
Premier Oil (PMO) 75.97p 3.31%
Games Workshop Group (GAW) 4,548.00p 2.29%
Kier Group (KIE) 148.69p 2.26%
Energean Oil & Gas (ENOG) 818.00p 2.12%
Tullow Oil (TLW) 203.50p 2.03%
Man Group (EMG) 146.90p 1.45%
Ascential (ASCL) 375.00p 1.41%
Hunting (HTG) 523.00p 1.36%

FTSE 250 - Fallers

AJ Bell (AJB) 385.88p -3.53%
Pets at Home Group (PETS) 173.90p -3.39%
Apax Global Alpha Limited (APAX) 144.00p -2.04%
IntegraFin Holding (IHP) 381.75p -1.62%
Royal Mail (RMG) 200.20p -1.62%
Workspace Group (WKP) 875.00p -1.02%
Safestore Holdings (SAFE) 627.50p -0.79%
Capita (CPI) 106.28p -0.67%
Hammerson (HMSO) 272.70p -0.62%
Crest Nicholson Holdings (CRST) 355.40p -0.62%