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(Alliance News) - Stocks in London were struggling to make headway at midday on Friday as caution prevailed before the closely-watched US jobs report this afternoon.
Due for release at 1330 BST, economists predict US nonfarm payrolls to have increased by 750,000 in August, having risen 943,000 in July. The unemployment rate is forecast to fall to 5.2% from 5.4%.
The FTSE 100 index was up 12.71 points, or 0.2%, at 7,176.41. The mid-cap FTSE 250 index was up 36.54 points, or 0.2%, at 24,261.81. The AIM All-Share index was up 2.25 points, or 0.2%, at 1,309.92.
The Cboe UK 100 index was up 0.1% at 713.41. The Cboe 250 was down 0.2% at 22,059.52, and the Cboe Small Companies was down 0.2% at 15,537.81.
In mainland Europe, the CAC 40 stock index in Paris was down 0.1%, while the DAX 30 in Frankfurt was up 0.3%.
IG Group's Josh Mahony said traders are "clearly hesitant to take any significant positions" ahead of the US jobs data.
"Previous predictions of a decline in non-farm payrolls have been heightened after a disappointing ADP and contraction in the employment element of Wednesday's ISM manufacturing PMI survey. [Fed Chair] Jerome Powell has clearly indicated that the Fed expects continued economic progress as they seek to lay out plans for a tapering programme. Beyond that, the Fed have a significantly more stringent criteria in mind for rate hikes, and the any weakness in today's jobs report would likely highlight how such move would likely be some way off yet."
In the FTSE 100, Berkeley Group was down 0.1%, giving back earlier gains, after the housebuilder said it has started the new year with a continuation of the "resilient" market conditions seen last year.
As a result, the London-focused housebuilder expects to meet its annual profit guidance, with pretax profit for the year to April 30, 2022, to come in at or above the GBP518.1 million reported in financial 2021.
Further, Berkeley confirmed its proposed B-share capital return GBP451 million will be completed later this month. This will be done with the first half of the previously identified surplus capital of GBP228 million issued in August, then the remaining GBP223 million of the shareholder return issued in the year to March 31, 2022.
Following the B-share payment, the next scheduled shareholder return is the GBP141 million for the six months to September 30, which might be paid in dividends or via a share buyback, Berkeley added.
Steve Clayton, Hargreaves Lansdown Select fund manager said: "We hold Berkeley in our HL Select UK Growth Shares fund because of its strong cash generation. Berkeley takes on the big, complex projects that rivals find daunting. That means it can buy land cheaply, because it can be the only one that turns up to the auction. Their development expertise allows them to turn cheap, brownfield sites into premium developments, making fat margins in the process."
Blue-chip peers Barratt Developments, Taylor Wimpey and Persimmon were up 0.9%, 0.3% and 0.6% respectively.
AstraZeneca was up 0.2% after the Anglo-Swedish drugmaker said it has reached an agreement with the European Commission that will end legal proceedings over a Covid-19 vaccine supply deal.
Officials had accused AstraZeneca of prioritising UK vaccine deliveries over the EU order and European Commission lawyers went to court to demand deliveries or see huge daily fines imposed for any ongoing shortfall.
The European Commission took AstraZeneca to court after the firm failed to deliver all of a promised 200 million doses by June 2021, but the drugmaker will now have until the end of March next year to make up the number.
AstraZeneca has committed to delivering 60 million doses of the vaccine by the end of the third quarter of this year, 75 million by the end of the fourth quarter and 65 million by the end of the first quarter of next year.
The agreement ends the bitter legal spat and AstraZeneca will not face any fines or penalty payments, unless it falls short of its new target dates.
Separately, AstraZeneca said the EU approved its severe blood disorder drug for use in children. The European Commission based the approval on positive interim results from AstraZeneca's Phase III clinical trial in children and adolescents with paroxysmal nocturnal haemoglobinuria.
In the FTSE 250, Discoverie Group was the best performer, up 14% at 1,174.00p, after the electronics applications components maker raised GBP55 million via a share placing.
DiscoverIE said it decided to upsize the placing following significant investor demand and in light of the strong pipeline of near-term acquisition opportunities. DiscoverIE had said Thursday that it would raise around GBP45 million.
The company placed a total of 5.4 million new shares at a price of 1,028.00p each.
Ashmore Group was the worst performer, down 5.0%. The emerging markets-focused asset manager said it made significant progress against its strategic objectives over the past year.
For the financial year ended June 30, net revenue fell to GBP291.7 million from GBP330.5 million last year and pretax profit rose to GBP282.5 million from GBP221.5 million.
Assets under management rose 13% to USD94.4 billion as at June 30 from USD83.6 billion at the same time a year ago. However, adjusted earnings before interest, tax, depreciation and amortisation was GBP195.7 million, down 12% from GBP222.5 million last year. The figure also just missed consensus forecasts of GBP196 million.
Mark Crouch, analyst at eToro, explained: "Ashmore's full year results paint a mixed picture for the asset management firm. While it has beat its profits from a year ago handsomely, both its EBIDTA and net revenues were down. The company says this is largely down to lower fee income offset by higher fee performance, but the ongoing poor performance of emerging markets cannot be discounted. The profit growth reflects in the fact that a year ago its bottom line was hit hard by the onset of the coronavirus crisis.
"The asset manager focuses largely on EM, which has been a tricky area in the past year to say the least. Not only has the coronavirus crisis hit emerging markets hard, and continues to do so with vaccines largely only penetrating developed economies so far, but markets such as China have more recently been roiled by regulatory crackdowns."
Currency markets were subdued ahead of the US jobs numbers. The pound was quoted at USD1.3833 at midday on Friday, little changed from USD1.3836 at the London equities close Thursday.
On the economic front, the UK services sector activity lost momentum in August amid staff shortages and supply chain issues, according to IHS Markit.
The IHS Markit-CIPS UK services purchasing managers' index registered 55.0 points in August, down from 59.6 in July and was also below the flash estimate of 55.5 points.
Markit said the services PMI has registered above the 50.0 no-change mark in each of the past six months, but the rate of expansion was the slowest since the service sector returned to growth after lockdown earlier this year.
Marc Cogliatti of Validus Risk Management commented: "Once again, purchasing managers cited the 'pingdemic' and resulting staff shortages that meant they were unable to meet demand.
"What is also evident, is that supply constraints, a tight labour market and the rising cost of raw materials are pushing up prices. Consequently, we continue to expect the Bank of England to begin hiking interest rates mid next year with the primary objective of keeping inflation under control. In turn, expectations of higher rates should support the pound, particularly against the euro given that the ECB still appear a long way from beginning to tighten policy."
The euro was priced at USD1.1870, up slightly from USD1.1862. Against the yen, the dollar was trading at JPY109.95, a touch lower from JPY109.98.
On the continent, the eurozone's private sector recorded another marked period of growth in August, with momentum fading slightly from July's 15-year high.
The IHS Markit eurozone PMI composite output index fell slightly in August to 59.0 points from 60.2 seen in July. Further, a slight loss of growth momentum in August was signalled by the services business activity index falling to 59.0 points from July's 15-year high of 59.8.
Brent oil was quoted at USD73.45 a barrel Friday at midday, up from USD73.34 late Thursday. Gold was trading at USD1,813.15 an ounce, flat from USD1,812.03.
US stock market futures were set for a higher open, with the S&P 500 and Nasdaq Composite indices looking to extend further records.
The Dow Jones Industrial Average was called up 0.2%, the S&P 500 up 0.2%, and the Nasdaq Composite up 0.1%.
On the political front, a key moderate US senator urged fellow Democrats on Thursday to "hit a strategic pause" on a USD3.5 trillion social welfare package, in a move that threatens to derail President Joe Biden's economic agenda.
Citing more pressing priorities like burgeoning inflation, record debt and spiking Covid-19 cases, West Virginia's Joe Manchin called on his Democratic colleagues to "take the time to get it right" before committing to the historic package of healthcare, education and climate provisions.
"Instead of rushing to spend trillions on new government programs and additional stimulus funding, Congress should hit a strategic pause on the budget-reconciliation legislation," he said in an op-ed in the Wall Street Journal.
Manchin, whose state is among the most conservative and pro-Trump in the country, often crosses the aisle to work with the Republicans. He is seen as the deciding vote on many key issues in the equally divided Senate.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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