London midday: Stocks nudge lower; all eyes on payrolls report

(Sharecast News) - London stocks had nudged into the red by midday on Friday after the release of uninspiring services data, as caution set in ahead of the non-farm payrolls report. The FTSE 100 was down 0.1% at 7,441.31, reversing earlier gains. Stocks advanced on Thursday, after the Federal Reserve and Bank of England's decisions to stand on pat on interest rates sparked hopes that rates have peaked.

Richard Hunter, head of markets at Interactive Investor, said: "Attention now turns to the pivotal non-farm payrolls report later today, where it is expected that 180000 jobs will have been added in October, as compared to 336000 the previous month and with unemployment remaining at 3.8%.

"As ever, the headline number will be critical in establishing the latest state of play. A reading which conforms to consensus will provide further relief both to the Fed and to investors, while a hot reading would complicate the entire narrative once more, likely leading to higher yields and reigniting interest rate hiking concerns."

The payrolls report, unemployment rate and average earnings are all due at 1230 GMT.

On home shores, a survey showed the service sector had a lacklustre October as cost-of-living pressures continued to weigh on demand.

The latest S&P Global/CIPS UK Services PMI Business Activity Index came in at 49.5. That was up marginally on September's 49.3, and ahead of both the flash reading and consensus of 49.2.

However, the print has now been below the key 50.0 level for three consecutive months. A reading above 50.0 suggests growth, while one below indicates contraction.

Respondents cited cost of living pressures, higher interest rates and weak consumer confidence for the lacklustre customer demand. Lower new orders and uncertainty about the business outlook mean companies also continued to cut jobs.

However, cost inflation eased to its lowest level for 32 months.

The composite PMI - the weighted average of comparable manufacturing and services indices - was 48.7 in October, up slightly from September's eight-month-low of 48.5.

Tim Moore, economics director at S&P Global Market Intelligence, said: "A shallow downturn in the UK service sector activity persisted in October as businesses struggled to make headway.

"Forward-looking survey indicators suggested that service providers will continue to skirt with recession. The degree of optimism towards the business outlook was the lowest in 2023 so far, despite relief that interest hikes have taken a pause this autumn."

Investors were also mulling industry data showing that retail footfall fell sharply in October as heavy rainfall across the UK kept shoppers at home.

The latest BRC-Sensormatic IQ Footfall Monitor showed that total footfall fell 5.7% year-on-year in October, compounding September's 2.9% decline. Within that, high street footfall was down 4.6%, while retail parks and shopping centres saw declines of 4.3% and 7.3%, respectively.

Helen Dickinson, chief executive of the British Retail Consortium, said: "Umbrellas were up as heavy rainfall descended across the UK in October, leading many shoppers to stay at home.

"As inflationary pressures on households begin to ease, some people are shopping around slightly less, braving the rain only to make their final purchases."

However, she added: "While consumer confidence may be higher than 2022, it is still very weak. The economic landscape remains tough, with input prices and cost pressures above normal levels."

Chinese services figures were also in focus, as the latest Caixin purchasing managers' index rose to 50.4 in October from 50.2 in September, coming in below consensus expectations for a reading of 51.0.

A reading above 50.0 signals expansion, while a reading below indicates contraction.

An official survey released earlier in the week showed that the services PMI fell to 50.1 in October from 50.9 in September.

In equity markets, corporate news was scarce but consumer electronics retailer Currys rallied after agreeing to sell its entire Greek and Cypriot division for €200m (£175m), as it looks to simplify its business model and free up cash. The company is selling Dixons South East Europe, trading as Kotsovolos, to Public Power Corporation.

DIY and building supplies retailer Wickes gained after saying it remains on track to meet full-year targets despite a slump in sales in the third quarter, as it warned some installation sales would be pushed into next year.

In broker note action, Smith & Nephew jumped after an upgrade to 'overweight' at JPMorgan, while Anglo American traded up after an upgrade to 'outperform' at Oddo.

Rightmove lost ground after Citi reiterated its 'sell' rating on the shares, highlighting rising competition from US group CoStar, which recently agreed to buy OnTheMarket.

Market Movers

FTSE 100 (UKX) 7,441.31 -0.07% FTSE 250 (MCX) 17,861.97 0.53% techMARK (TASX) 4,074.40 0.35%

FTSE 100 - Risers

Sainsbury (J) (SBRY) 281.10p 3.42% Smith & Nephew (SN.) 992.20p 3.14% Ocado Group (OCDO) 524.80p 3.06% BT Group (BT.A) 120.95p 2.98% Kingfisher (KGF) 221.20p 2.93% Rentokil Initial (RTO) 436.90p 2.41% NATWEST GROUP (NWG) 185.80p 2.20% JD Sports Fashion (JD.) 129.15p 2.14% Flutter Entertainment (CDI) (FLTR) 13,625.00p 2.10% SEGRO (SGRO) 762.20p 1.82%

FTSE 100 - Fallers

InterContinental Hotels Group (IHG) 5,690.00p -3.07% Whitbread (WTB) 3,225.00p -2.63% Shell (SHEL) 2,708.50p -2.15% Sage Group (SGE) 973.80p -1.78% Relx plc (REL) 2,849.00p -1.38% Airtel Africa (AAF) 116.50p -1.27% Centrica (CNA) 155.65p -1.24% Rightmove (RMV) 467.70p -1.16% Compass Group (CPG) 2,080.00p -1.05% Reckitt Benckiser Group (RKT) 5,490.00p -0.94%

FTSE 250 - Risers

Wizz Air Holdings (WIZZ) 1,794.00p 8.63% FDM Group (Holdings) (FDM) 454.00p 5.09% Currys (CURY) 47.78p 3.91% Bakkavor Group (BAKK) 88.60p 3.50% TUI AG Reg Shs (DI) (TUI) 445.60p 3.24% Drax Group (DRX) 445.40p 3.15% Ceres Power Holdings (CWR) 226.00p 2.82% Liontrust Asset Management (LIO) 570.50p 2.79% Big Yellow Group (BYG) 1,039.00p 2.57% Persimmon (PSN) 1,099.00p 2.52%

FTSE 250 - Fallers

Helios Towers (HTWS) 63.95p -2.81% International Distributions Services (IDS) 254.90p -2.41% Elementis (ELM) 123.00p -2.38% Caledonia Investments (CLDN) 3,230.00p -1.97% Genus (GNS) 2,288.00p -1.89% Morgan Sindall Group (MGNS) 1,954.00p -1.71% IG Group Holdings (IGG) 654.50p -1.58% Darktrace (DARK) 349.20p -1.58% Bluefield Solar Income Fund Limited (BSIF) 114.40p -1.21% FirstGroup (FGP) 161.30p -1.16%