London pre-open: Stocks seen flat ahead of payrolls report

London stocks were set for a flat open on Friday as investors err on the side of caution ahead of the release of the US non-farm payrolls report.

The FTSE 100 was called to open unchanged at 7,164.

CMC Markets analyst Michael Hewson said: "Today’s main event is the US payrolls report for August this afternoon, and expectations over a decent number have been pared back somewhat after disappointing ADP payrolls earlier this week, as well as a contraction in the employment component of the ISM manufacturing survey.

"The big question is whether this really matters in the wider scheme of things, and in terms of US monetary policy the answer has to be probably not that much, particularly given the aftermath of Jay Powell’s comments last week at Jackson Hole, which laid out slightly more clearly the pathway to a tapering announcement, and which helped pull the rug out from underneath the US dollar.

"As far as the July jobs report was concerned there wasn’t much to dislike with strong gains of 943k, as well as a decent upward revision to 938k for June, which sent the unemployment rate tumbling from 5.9% to 5.4%, while the underemployment rate also fell from 9.8% to 9.2%.

"A rise in the participation rate was also well received, although it was fairly modest, rising to 61.7%, still well short of the 63.4% pre-pandemic.

"Even if today’s payrolls report falls short of expectations of around 725k, given the weaknesses seen in the ADP and ISM, it's unlikely to be the end of the world given current elevated levels of job vacancies across the US economy."

The payrolls report is due at 1330 BST, along with the unemployment rate and average earnings. On home shores, Markit's services PMI for August is at 0930 BST.

In corporate news, LondonMetric Property said it had sold a grocery building in Liverpool for £10.2m.

The 29,000 sq ft asset was bought for £8.1m in 2014 and is let to Marks & Spencer and Aldi. It generates a rent of £0.5m a year.

The sale price is line with the 31 March 2021 book value and crystallises a 26% profit on cost and an ungeared internal rate of return of 9%, the company said.