London open: FTSE flat ahead of non-farm payrolls

(Sharecast News) - London stocks were steady in early trade on Friday as investors eyed the release of the latest US non-farm payrolls report. At 0840 GMT, the FTSE 100 was flat at 8,316.10.

There are no major UK data releases due, but in the US the non-farm payrolls report for November is scheduled for release at 1330 GMT, along with the unemployment rate and average earnings.

Kathleeen Brooks, research director at XTB, said: "The December payrolls report is expected to show a sharp reduction in jobs growth at the end of 2024. Analysts are expecting a 165k increase in payrolls, this compares to a 227k increase for November. Private sector payrolls are also expected to moderate and grow by 140k, versus 194k in November. The unemployment rate is expected to remain steady at 4.2%, the highest level since August, and average hourly earnings are expected to stay at a 4% annual rate.

"Although jobs growth is expected to moderate, there are still pockets of strength in the labour market that could be inflationary. This is why the average earnings data is also a vital piece of information for this report. Monthly average hourly earnings data has been trending higher in recent months, compared with earlier in 2024. Although annual wage growth has been stable, the monthly figure could suggest that there is upward pressure brewing for wage inflation down the line.

"A moderation in jobs growth, yet elevated monthly inflation growth could make this report hard to decipher. On the one hand a softening labour market supports further easing from the Federal Reserve, on the other hand, stronger wage growth supports a high bar for future cuts."

Brooks said that if there is a large upward surprise in the payrolls report, there could be a further reduction in market expectations of future rate cuts from the Fed.

"In November there was a large upward surprise for payrolls, however, in recent months there has been some distortion to the figures due to adverse weather in October," she said.

"A more convincing argument for an upward surprise to payrolls is the strength of the US economy. The Atlanta Fed's GDPNow tool is predicting a 2.9% annual rate for GDP for Q4."

In equity markets, Sainsbury's lost ground as the supermarket chain said it would increase wages by 5% after bumper sales in its key Christmas quarter.

Sales over the four weeks to 4 January rose 3.8%, and Sainsbury's said it expected annual underlying retail operating profit to increase 7% at the mid-point of its £1.01bn - £1.06bn guidance range.

Third-quarter underlying sales rose 2.8%, with grocery up 4.1% and general merchandise and clothing down 0.1%. The Argos business was 1.4% lower during the period.

Elsewhere, shipping services firm Clarkson rallied as it said results for the year to the end of December 2024 were set to be "slightly ahead" of current market expectations.

The company now expects underlying pre-tax profit to be "not less than" £115m. This compares to £109.2m in the year to the end of December 2023.

In broker note action, Reckitt was boosted by an upgrade to 'overweight' by Morgan Stanley, while InterContinental Hotels was higher after an upgrade 'market perform' at Bernstein.

Persimmon was in the black as UBS upgraded its stance on the housebuilder to 'buy'.

Haleon was knocked lower by a downgrade to 'equalweight' at Morgan Stanley, while Serco fell after a downgrade to 'hold' from 'buy' at Jefferies.

Market Movers

FTSE 100 (UKX) 8,316.10 -0.04% FTSE 250 (MCX) 20,006.70 0.01% techMARK (TASX) 4,606.51 -0.03%

FTSE 100 - Risers

Reckitt Benckiser Group (RKT) 4,990.00p 1.36% InterContinental Hotels Group (IHG) 10,010.00p 1.23% Rolls-Royce Holdings (RR.) 586.80p 0.93% Persimmon (PSN) 1,102.00p 0.92% Melrose Industries (MRO) 565.20p 0.53% Barratt Redrow (BTRW) 407.50p 0.52% Imperial Brands (IMB) 2,646.00p 0.49% Flutter Entertainment (DI) (FLTR) 20,300.00p 0.45% Rightmove (RMV) 645.20p 0.40% Rio Tinto (RIO) 4,824.50p 0.38%

FTSE 100 - Fallers

Sainsbury (J) (SBRY) 257.20p -2.28% Hiscox Limited (DI) (HSX) 1,051.00p -1.78% Entain (ENT) 637.40p -1.76% Beazley (BEZ) 802.00p -1.60% Haleon (HLN) 377.10p -1.51% Spirax Group (SPX) 6,635.00p -1.04% Diageo (DGE) 2,532.00p -0.90% Tesco (TSCO) 364.70p -0.90% Pershing Square Holdings Ltd NPV (PSH) 4,130.00p -0.82% Croda International (CRDA) 3,299.00p -0.78%

FTSE 250 - Risers

Clarkson (CKN) 4,135.00p 6.30% Bridgepoint Group (Reg S) (BPT) 357.20p 4.75% Premier Foods (PFD) 190.00p 4.40% Moonpig Group (MOON) 211.50p 3.93% Senior (SNR) 163.40p 2.90% NB Private Equity Partners Ltd. (NBPE) 1,558.00p 2.64% Mobico Group (MCG) 76.55p 2.48% Fidelity Emerging Markets Limited Ptg NPV (FEML) 707.80p 2.30% Spirent Communications (SPT) 178.60p 1.59% Energean (ENOG) 1,034.00p 1.37%

FTSE 250 - Fallers

Currys (CURY) 87.65p -1.90% Ocado Group (OCDO) 274.00p -1.79% Ferrexpo (FXPO) 93.50p -1.79% Lancashire Holdings Limited (LRE) 638.00p -1.69% Serco Group (SRP) 149.20p -1.45% CMC Markets (CMCX) 251.00p -1.38% Templeton Emerging Markets Inv Trust (TEM) 162.60p -1.33% Helios Towers (HTWS) 90.30p -1.31% Pets at Home Group (PETS) 198.40p -1.10% Alpha Group International (ALPH) 2,315.00p -1.07%