London open: Stocks nudge lower ahead of payrolls; Pearson surges

London stocks nudged lower in early trade as investors awaited the release of the US non-farm payrolls report, while oil prices continued to retreat.

At 0830 BST, the FTSE 100 was down 0.2% to 7.235.59, while the pound was up 0.1% versus the dollar at 1.2933.

The always closely followed US non-farm payrolls report is expected to come in at 190,000 for April.

CMC Markets analyst Michael Hewson said there will also be particular scrutiny on any revision to the surprisingly low March number of 98k, especially in light of the fact that the equivalent ADP number was so strong at 263,000.

"Weather related arguments don’t really stack up when there is that sort of divergence," he said.

"The unemployment rate is expected to tick up slightly to 4.6%, but the more important factor will be what wages do. Yesterday labour costs for Q1 shot up to 3% from 1.3%, so you would expect to see equivalent inflationary pressures in average hourly earnings, however expectations here are for an unchanged number of 2.7%. Ultimately investors will be looking for evidence of a tightening labour market but thus far there has been little evidence of that despite jobless claims being at multi year lows."

The payrolls and unemployment rate are due at 1330 BST. Investors will also turn their attention to speeches from various Fed officials such as Stanley Fischer, John Williams, Charles Evans and Fed chair Janet Yellen.

There are no major UK data releases scheduled.

Crude oil prices extended their losses below $45 for the first time since Opec's output cut in November, with new fears that the output reduction plans will not be enough to reduce the global supply glut.

The sell-off was deepening as Opec keeps schtum, said Ipek Ozkardeskaya at London Capital Group.

"Dip-buyers are expected to intervene into the $40 level for a minor correction, given that the oil market has stepped into the oversold territory. "

She also noted that copper recorded the biggest two-day loss since July 2015, iron ore futures plunged nearly 15% over the last three sessions, with industrial metals indices trading at their lowest level since January.

"The slowdown in Chinese manufacturing activity is one of the major catalysts for the commodity sell-off," Ozkardeskaya said.

In corporate news, Pearson shares surged over 16% after the education publisher posted a 6% increase in first-quarter underlying sales as it reiterated its guidance for the full year and announced further cost-cutting measures and a strategic review of its K12 courseware publishing business.

Marks and Spencer Group rallied after it appointed Archie Norman as chairman to take over from Robert Swannell at the start of September.

British Airways owner International Consolidated Airlines Group racked up healthy gains as it reported first quarter-profits well ahead of expectations as a drop in costs offset lower passenger revenues. Operating profits in the first three months of the year of €170m before exceptional items were up 10% on the same period last year.

Smith & Nephew advanced after saying its full-year outlook for underlying revenue growth remained unchanged and reporting flat revenue for the first quarter.

Millennium & Copthorne Hotels was unchanged as it posted an 18% rise in first-quarter revenue per available room but highlighted difficult trading conditions in Asia.

EasyJet flew higher after reporting a 12% increase in passenger numbers for April and an improvement in the load factor.

Irish packaging group Smurfit Kappa was in the black after saying it was well positioned for the rest of the year and posting a rise in first-quarter revenue.

BBA Aviation nudged up after saying trading in the first four months of the year was in line, with revenue up 19% compared to the same period last year.

On the downside, InterContinental Hotels was on the back foot after it said first-quarter revenue grew but announced that chief executive Richard Solomons was stepping down after six years in the role.

Morgan Advanced Materials retreated as it said trading conditions since the full year were in line with management expectations, while Inmarsat was hit by a downgrade to 'underweight' at Barclays.

Market Movers

FTSE 100 (UKX) 7,235.59 -0.17%
FTSE 250 (MCX) 19,627.31 -0.27%
techMARK (TASX) 3,529.31 -0.00%

FTSE 100 - Risers

Pearson (PSON) 769.00p 16.87%
International Consolidated Airlines Group SA (CDI) (IAG) 596.50p 4.28%
Smith & Nephew (SN.) 1,311.00p 3.23%
Marks & Spencer Group (MKS) 366.70p 2.57%
easyJet (EZJ) 1,237.00p 2.32%
Fresnillo (FRES) 1,392.00p 1.98%
Randgold Resources Ltd. (RRS) 6,670.00p 1.29%
Smurfit Kappa Group (SKG) 2,164.00p 1.17%
Morrison (Wm) Supermarkets (MRW) 236.80p 1.02%
Kingfisher (KGF) 331.60p 0.91%

FTSE 100 - Fallers

Mediclinic International (MDC) 798.00p -1.97%
BP (BP.) 438.80p -1.35%
InterContinental Hotels Group (IHG) 4,129.00p -1.20%
Barclays (BARC) 209.35p -1.18%
Old Mutual (OML) 188.70p -0.89%
National Grid (NG.) 1,005.50p -0.89%
Royal Dutch Shell 'A' (RDSA) 2,007.50p -0.86%
Royal Dutch Shell 'B' (RDSB) 2,045.50p -0.80%
Merlin Entertainments (MERL) 509.00p -0.78%
Glencore (GLEN) 275.05p -0.78%

FTSE 250 - Risers

Acacia Mining (ACA) 389.90p 3.12%
ZPG Plc (ZPG) 375.30p 1.71%
National Express Group (NEX) 362.19p 1.31%
Just Eat (JE.) 584.00p 1.13%
Polymetal International (POLY) 974.00p 1.09%
Greggs (GRG) 1,088.00p 1.02%
Aldermore Group (ALD) 255.40p 0.95%
Ibstock (IBST) 228.20p 0.93%
Shaftesbury (SHB) 933.50p 0.81%
NMC Health (NMC) 2,127.00p 0.81%

FTSE 250 - Fallers

Inmarsat (ISAT) 778.00p -5.64%
Tullow Oil (TLW) 194.00p -2.95%
Lancashire Holdings Limited (LRE) 682.00p -2.43%
Morgan Advanced Materials (MGAM) 320.60p -2.38%
Hunting (HTG) 516.50p -2.27%
Weir Group (WEIR) 1,831.00p -2.14%
Countryside Properties (CSP) 266.40p -2.06%
Redefine International (RDI) 36.50p -1.59%
Kaz Minerals (KAZ) 433.50p -1.59%
Wood Group (John) (WG.) 735.50p -1.54%