London pre-open: Stocks seen lower as investors eye payrolls

London stocks were set for a negative open on Friday as investors awaited the release of the US non-farm payrolls report.

The FTSE 100 was expected to open 13 points lower at 7,235.

CMC Markets analyst Michael Hewson said the payrolls are expected to come in at 190k for April but 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 263k.

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

"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 later in the day.

There are no major UK data releases scheduled.

In corporate news, Marks and Spencer Group has appointed Archie Norman as chairman to take over from Robert Swannell at the start of September. Highly respected Norman has earnt a reputation for improving the fortunes of several major companies including Kingfisher, Asda and ITV.

British Airways owner International Consolidated Airlines Group (IAG) 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 said its full year outlook for underlying revenue growth remained unchanged in the 3%-4% range after posting flat first quarter revenue of $1.14bn, flat on a reported basis after -2% impact from the disposal of its gynaecology business and -1% currency headwind. Revenue was up 3% on an underlying basis.