London pre-open: Stocks seen higher ahead of payrolls

The FTSE 100 was called to open 26 points higher at 7,477.

CMC Markets analyst Michael Hewson said: "Despite the inability of US markets to eke out a gain European markets look set to open modestly higher ahead of today’s US jobs report which, along with the September CPI report which is due next week could shift the odds significantly on whether we see another rate hike in November.

"One other reason for the welcome retreat in yields yesterday may well have been the sharp decline in oil prices we’ve seen the past couple of days, which has seen all the September gains wiped out, and could help dilute some of the recent concern over energy price driven inflation."

The non-farm payrolls report, unemployment rate and average earnings are all due at 1330 BST.

On home shores, investors will be mulling the latest data from Halifax, which showed that annual house prices fell again in September as high borrowing costs continued to dent the market.

House prices declined by 4.7% on the year, following a 4.5% drop in August.

On a month-on-month basis, house prices were down 0.4% in September following a 1.8% decline the month before.

The average price of a home now stands at £278,601, which is around the level seen in early 2022.

Kim Kinnaird, director of Halifax Mortgages, said: "Activity levels continue to look subdued compared to recent years, with industry data showing lower levels of new instructions to sell homes and agreed sales. Borrowing costs are the primary factor, given the impact of higher interest rates on mortgage affordability. Against this backdrop, homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market.

"However, with Base Rate now likely to be at or around its peak, we are seeing fixed rate mortgages deals ease back from recent highs. Wage growth also remains strong, which has helped with affordability, with the house price to income ratio now at its lowest level since June 2020 (6.2 in September versus 6.3 in August)."

Elsewhere, industry research out earlier showed that retail footfall eased in September as the unseasonably warm weather put off shoppers.

According to the latest BRC-Sensormatic IQ Monitor, total UK footfall decreased by 2.9% year-on-year in the five weeks to 30 September, further adding to August’s 1.9% decline.

Within that, footfall on high streets fell by 1.7% and by 2.4% in retail parks. The heaviest fall was seen in shopping centres, where footfall was 4% lower year-on-year.

Helen Dickinson, chief executive of the British Retail Consortium, said: "During the warmer-than-expected weather, footfall slowed in September, with fewer shoppers across all locations.

"High streets and retail parks held up slightly better as the returns to school helped increase the number of shopping visits at the start of the month."

Andy Sumpter, EMEA retail consultant at Sensormatic Solutions, said: "Footfall remained subdued as consumer caution on discretionary spending stayed high, perhaps prompted by shoppers withholding spend to save ahead of the golden quarter and Christmas.

"While retailers will be hoping this month’s first fall in food prices in two years will mark the beginning of the end of inflationary-driven pressure on household budgets, many will recognise that the reality of inflationary-driven interest rates - and consequently higher mortgage and rent payments - will be with us higher and for longer, meaning once again retailers will be required to run faster just to stand still."

Retail analysts often refer to the last three months of the year as the golden quarter, in recognition of the importance of festive spending for many retailers.

In equity markets, pub chain JD Wetherspoon swung to a full-year profit after sales rose by over a tenth, though underlying growth has eased somewhat in the first quarter of the new financial year.

Revenues rose 10.6% in the 12 months ended 30 July to £1.93bn, while like-for-like sales jumped 12.7%. However, in the nine weeks to 2 October, that LFL growth had eased to 9.9% from 11.5% reported in the fourth quarter.

Shell updated the market on its third-quarter outlook, with the integrated gas segment expecting production of between 880,000 and 920,000 barrels of oil equivalent per day, and LNG liquefaction volumes between 6.6 million and seven million tonnes.

The upstream sector projected production of 1,700,000 to 1,800,000 equivalent daily barrels and exploration well-write offs of approximately $0.2bn.

The marketing segment expected sales volumes between 2,450,000 and 2,850,000 barrels daily, with similar results to the third quarter of 2022, and the chemicals and products sector anticipated a refining margin of $16 per barrel and a chemicals margin of $116 per tonne, with refinery and chemicals utilisation of 82% to 86% and 69% to 72%, respectively.