London midday: Stocks stay up ahead of payrolls report; Clarkson surges

(Sharecast News) - London stocks were still a little firmer by midday Friday as investors eyed the release of the latest US non-farm payrolls report. The FTSE 100 was up 0.2% firmer at 7,651.42.

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

CMC Markets analyst Michael Hewson said: "Today's December number is expected to show a slowdown to 203k; however, this could be understating things given that most of the estimates in recent months have come in below the actual numbers.

"What is slightly more worrying is the inability of the participation rate to show any signs of increasing, falling back to its lows of the year at 62.1%, while unemployment rose to 3.7%. No changes are expected to either of these.

"Nonetheless, the attention today will be less on the headline numbers but on how many services jobs are added, as well as the pace of any wage gains, as some FOMC members fret about the prospect of a wage price spiral."

Investors were also digesting the latest reading on the UK construction sector, which showed that activity fell in December at the fastest rate since May 2020.

The S&P Global/CIPS construction purchasing managers' index declined to 48.8 from 50.4 in November, coming in below the 50.0 mark that separates contraction from expansion for the first time since last August.

The survey showed that house building fell back into contraction for the first time since July, while civil engineering remained the weakest performer, with a sixth month of contraction.

Lewis Cooper, economist at S&P Global Market Intelligence, said: "The UK's construction sector registered a relatively poor finish to 2022, with business activity falling into decline following a three-month growth sequence amid the fastest contraction in new work since the initial pandemic period in May 2020. Companies cited weak client demand, driven partly by higher prices amid ongoing inflationary pressures.

"Commercial construction activity remained the only bright spot, though here the rate of growth came close to stalling, with the overall contraction led by a further sharp decline in civil engineering and the first fall in residential construction activity since last July."

The latest survey from Halifax was also in focus. It showed that house prices fell in December for the fourth month in a row amid rising interest rates.

Prices declined by 1.5% on the month following a 2.4% drop in November. On the year, meanwhile, house prices rose 2% in December following a 4.6% increase the month before, with the rate of growth slowing in all nations and regions.

Kim Kinnaird, director at Halifax, said: "As we've seen over the past few months, uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, is leading to an overall slowing of the market.

"The housing market was a mixed picture in 2022. We saw rapid house price growth during the first six months, followed by a plateau in the summer before prices began to fall from September, as the impact of cost-of-living pressures, coupled with a rising rates environment, began to take effect on household finances and demand."

Looking ahead, Kinnaird said prices were expected to fall by 8% over the course of this year.

In equity markets, miners were among the top performers as metals prices rose, with Anglo American, Glencore, Rio and Antofagasta all higher.

Shell rose as the oil giant said it expects to pay around $2bn in windfall taxes for the final quarter of 2022.

The company said that fourth-quarter results from the integrated gas segment were set to be "significantly higher" than in Q3. It also said that liquefied natural gas production will take a hit from longer-than-expected plant outages in Australia.

Elsewhere, shipping services firm Clarkson surged as it said results for the year to the end of December were set to be ahead of current market expectations.

In a very brief statement, the company hailed strong trading throughout the final quarter, particularly from the broking division. It now expects underlying pre-tax profit of no less than £98m.

Components maker Essentra tumbled after saying it expects annual profits to be in line with expectations despite economic headwinds globally.

In broker note action, Next was knocked lower by a downgrade to 'underperform' at Credit Suisse, while easyJet was hit by a downgrade to 'neutral' at Goldman Sachs. Rentokil fell after an initiation at 'underperform' by Exane.

Market Movers

FTSE 100 (UKX) 7,651.42 0.24% FTSE 250 (MCX) 19,410.77 -0.27% techMARK (TASX) 4,495.84 0.20%

FTSE 100 - Risers

Endeavour Mining (EDV) 1,900.00p 3.60% Anglo American (AAL) 3,409.00p 2.71% Ocado Group (OCDO) 731.20p 2.61% Haleon (HLN) 320.50p 2.40% Mondi (MNDI) 1,490.00p 2.12% Sainsbury (J) (SBRY) 244.70p 2.00% Tesco (TSCO) 242.60p 1.72% Rio Tinto (RIO) 6,042.00p 1.72% BT Group (BT.A) 125.70p 1.53% Antofagasta (ANTO) 1,634.00p 1.46%

FTSE 100 - Fallers

Rentokil Initial (RTO) 493.40p -5.19% Compass Group (CPG) 1,893.50p -2.12% Standard Chartered (STAN) 691.20p -1.99% Diageo (DGE) 3,592.50p -1.64% Spirax-Sarco Engineering (SPX) 10,555.00p -1.45% DCC (CDI) (DCC) 4,270.00p -1.41% Halma (HLMA) 2,029.00p -1.36% Schroders (SDR) 441.60p -1.32% Experian (EXPN) 2,809.00p -1.27% Frasers Group (FRAS) 752.00p -1.18%

FTSE 250 - Risers

Clarkson (CKN) 3,260.00p 3.66% Playtech (PTEC) 546.00p 2.25% W.A.G Payment Solutions (WPS) 80.00p 2.04% Jupiter Fund Management (JUP) 140.70p 2.03% BlackRock World Mining Trust (BRWM) 720.00p 1.98% Hikma Pharmaceuticals (HIK) 1,678.50p 1.88% Carnival (CCL) 654.80p 1.80% Harbour Energy (HBR) 299.20p 1.80% Hochschild Mining (HOC) 76.50p 1.66% Inchcape (INCH) 895.00p 1.65%

FTSE 250 - Fallers

Essentra (ESNT) 211.50p -9.62% Dunelm Group (DNLM) 1,055.00p -3.03% Savills (SVS) 833.00p -2.80% Volution Group (FAN) 381.50p -2.55% Currys (CURY) 60.15p -2.27% Dechra Pharmaceuticals (DPH) 2,510.00p -2.26% ASOS (ASC) 564.00p -2.25% Molten Ventures (GROW) 397.20p -2.17% Plus500 Ltd (DI) (PLUS) 1,759.00p -2.11% Hays (HAS) 119.10p -1.89%