London midday: Stocks warm up ahead of long weekend
London stocks were cooking on gas on Friday, fired up by several upbeat corporate updates, as investors eyed the release of the US non-farm payrolls report, US-China trade talks and a sunny long weekend ahead.
Just after midday, the FTSE 100 was up 0.5% at 7,537.68, while the pound was down very slightly versus the dollar at 1.3568 and up 0.1% against the euro at 1.1339.
The US payrolls report generally captivates the market, even though the Federal Reserve informed the market earlier in the week that it will continue to hike rates gradually.
NFP growth has been incredibly volatile in recent months, with March's print showing an increase of just 103,000 following an above-trend increase of 326,000 in February. April's report from the Labour Department is expected to show a rebound to 193,000, in line with the average over the past 12 months.
The payroll report scheduled for 1330 BST is set to spark a final surge in volatility in a week that has been dominated by a strong dollar and subsequent US stock market underperformance, said Chris Beauchamp, chief market analyst at IG. "The Fed may have chosen to remain steady on Wednesday, yet markets fully expect to see another US rate rise next month. The futures market is showing a 100% chance of a hike. Will there be a sufficient bounce back in the wake of last month’s disappointing payrolls figure? There will be a keen focus on wage growth given it’s influence on inflation expectations.
"With US earnings consistently outperforming in the first quarter, there should be some form of feedback into jobs figures, as firms invest their tax savings into new hires and pay their current employees more generously."
He added that European markets were being boosted by the incredible about-turn on Wall Street and cautious optimism as US-Chinese talks enter their final day. "However, with Steve Mnuchin declaring that both sides are enjoying very good conversations, markets are feeling somewhat optimistic that some form of satisfactory solution can be reached."
On the UK corporate front, British Airways and Iberia owner IAG flew higher after it reported a 75% increase in first-quarter operating profit to €280m. Boss Willie Walsh did not provide the market with any update about a potential bid to acquire Norwegian Air, sending shares in the Scandi carrier tumbling.
Budget rival EasyJet rose as it said passenger numbers and the load factor grew in April.
But both were trumped by education publisher Pearson, which gained after saying that total underlying revenues edged up 1% in the first quarter and that it was on track to deliver its expectations for the year.
DIY retailer Kingfisher was higher as sunny weather over the British bank holiday weekend bodes well for sales of outdoor furniture and other garden equipment.
Paper and packaging group Smurfit Kappa advanced as it posted a 22% jump in first-quarter earnings and said that full-year EBITDA is expected to be "materially better" than 2017. Paper peer Mondi was also boosted.
InterContinental Hotels was in the black as it reported a 3.5% increase in global revenue per available room for the first quarter, while rival Millennium & Copthorne Hotels gave up early gains as a doubling in first-quarter pre-tax profit came alongside signs of a weakening in the London market.
On the downside, HSBC was under pressure after it reported a 4% fall in first-quarter profit as costs rose from increased investment in growth and digital banking, with the announcement of a $2bn share buyback not enough to swing investors.
On the broker note front, Dixons Carphone racked up strong gains as RBC Capital Markets reiterated its 'outperform' rating and upped its price target and estimates for the stock on expectations of a strong fourth quarter and good momentum into the new financial year.
BHP Billiton was upgraded to ‘overweight’ by Barclays, while Rio Tinto was cut to ‘equalweight’.
Market Movers
FTSE 100 (UKX) 7,538.77 0.48%
FTSE 250 (MCX) 20,454.56 0.44%
techMARK (TASX) 3,438.19 0.49%
FTSE 100 - Risers
Pearson (PSON) 877.20p 5.69%
International Consolidated Airlines Group SA (CDI) (IAG) 671.60p 4.84%
Ashtead Group (AHT) 2,104.00p 2.53%
Johnson Matthey (JMAT) 3,351.00p 2.41%
Mondi (MNDI) 1,929.50p 1.85%
Kingfisher (KGF) 283.70p 1.76%
BHP Billiton (BLT) 1,585.20p 1.75%
Direct Line Insurance Group (DLG) 369.80p 1.73%
Sage Group (SGE) 644.00p 1.64%
Micro Focus International (MCRO) 1,269.50p 1.64%
FTSE 100 - Fallers
HSBC Holdings (HSBA) 700.50p -2.88%
Berkeley Group Holdings (The) (BKG) 4,067.00p -1.36%
Randgold Resources Ltd. (RRS) 6,068.00p -0.65%
TUI AG Reg Shs (DI) (TUI) 1,715.00p -0.46%
British American Tobacco (BATS) 3,882.00p -0.41%
Evraz (EVR) 488.30p -0.35%
Shire Plc (SHP) 3,834.50p -0.22%
Legal & General Group (LGEN) 272.90p -0.15%
Sainsbury (J) (SBRY) 301.72p -0.09%
Standard Life Aberdeen (SLA) 367.90p 0.05%
FTSE 250 - Risers
Dixons Carphone (DC.) 217.90p 6.81%
Wizz Air Holdings (WIZZ) 3,406.00p 3.75%
Hunting (HTG) 800.00p 2.89%
Entertainment One Limited (ETO) 293.15p 2.79%
Babcock International Group (BAB) 737.00p 2.73%
Sanne Group (SNN) 643.00p 2.72%
Clarkson (CKN) 2,495.00p 2.67%
Hochschild Mining (HOC) 219.00p 2.67%
Centamin (DI) (CEY) 160.75p 2.58%
Inmarsat (ISAT) 385.40p 2.47%
FTSE 250 - Fallers
Card Factory (CARD) 220.00p -2.22%
Hikma Pharmaceuticals (HIK) 1,300.50p -2.14%
Fisher (James) & Sons (FSJ) 1,744.00p -2.02%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 106.50p -1.84%
TI Fluid Systems (TIFS) 252.00p -1.56%
Go-Ahead Group (GOG) 1,708.00p -1.56%
NewRiver REIT (NRR) 285.00p -1.38%
IP Group (IPO) 133.20p -1.33%
Millennium & Copthorne Hotels (MLC) 554.00p -1.25%
RPC Group (RPC) 779.40p -1.22%