London pre-open: Stocks seen up ahead of payrolls

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Sharecast News | 05 May, 2023

London stocks were set to rise at the open on Friday following heavy losses in the previous session, as investors eyed the latest US non-farm payrolls report.

The FTSE 100 was called to open 34 points higher at 7,736.

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

CMC Markets analyst Michael Hewson said: "Having seen the Federal Reserve hike by another 25bps rate hike earlier this, a strong number today would keep the prospect of another rate hike in June, although it would need to be a bumper number to do that.

"There is a school of thought after Wednesday that the Fed is now on pause, and the only real question is not whether we saw another hike, but when we see the first rate cut.

"A strong, or in line number today, along with next week’s April CPI, will shape the discussion here, but for now, even with the current banking turmoil, the timing of when the Fed starts cutting is likely to shape market direction from here on in."

Investors were digesting the latest data out of China, which showed that growth in the services sector was weaker than expected in April.

The Caixin services purchasing managers’ index dipped to 56.4 from 57.8 in March, coming in below consensus expectations for a reading of 57.0. Still, it remained above the 50.0 mark that separates contraction from expansion and was fourth month of expansion in a row.

On home shores, data out earlier showed that footfall jumped on high streets last month, despite the ongoing cost-of-living crisis and record inflation.

According to the latest BRC-Sensormatic IQ footfall monitor, total UK footfall dipped 1.5 percentage points on March in April but was 5.3% higher than April 2022.

Within that, footfall on high streets jumped 10.5% year-on-year, while shopping centres reported a 7.9% improvement. Retail parks saw a 6.9% decline.

Helen Dickinson, chief executive of the British Retail Consortium, said: "Footfall [improved year-on-year] mainly in high streets and shopping centres, which were the most affected during the pandemic and still have the furthest to catch up.

"Retail is finding a new balance, as the rise in online shopping and spread of hybrid working has changed consumer shopping habits. As a result, while we expect footfall to continue to improve, it may never reach the levels seen prior to the pandemic."

In corporate news, British Airways and Iberia owner IAG lifted its full-year earnings forecasts on the back of strong summer demand as its first-quarter profits performance beat expectations.

The group, which also owns Aer Lingus, now expects annual profit at the top end of a €1.8 - 2.3bn range given in February.

Operating profit for the three months to March was €9m, compared with a €718m loss a year earlier and smashing the €179m loss forecast by analysts.

IAG said the summer outlook was encouraging, adding that capacity in the North Atlantic and Latin American markets was now back at pre-pandemic levels, driven by leisure demand.

Elsewhere, safety equipment maker Halma said it has agreed to buy Poland’s Sewertronics for up to €59m (£52m).

Sewertronics' technology repairs and rehabilitates wastewater pipelines without the need to dig a trench, by inserting a lining into the pipe, which is then cured using its innovative and patented ultraviolet (UV) LED technology.

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