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(Alliance News) - Stock prices in London were lower at midday on Friday as investors look tentatively ahead to the monthly US jobs report for May at 1330 BST, amid fears central banks will soon rein in stimulus put in place to support the economy.
Economists expect the US Labor Department data will show the world's largest economy added 720,000 jobs and the unemployment rate ticked down to 5.9% in May, a consensus supported by positive data released earlier this week.
Payroll services firm ADP on Thursday said private employers added a huge 978,000 jobs last month, while the Institute for Supply Management reported its index gauging the health of the service sector, a key employer, hit an all-time high in May.
In addition, weekly data from the Labor Department showed new unemployment aid applications dropped below 400,000 last week for the first time since the pandemic sent them into the millions in March 2020.
The FTSE 100 index was down 17.41 points, or 0.3%, at 7,046.98. The mid-cap FTSE 250 index was down 26.41 points, or 0.1%, at 22,775.98. The AIM All-Share index was flat at 1,249.78.
The Cboe UK 100 index was down 0.3% at 702.10. The Cboe 250 was down 0.2% at 20,530.26, and the Cboe Small Companies was 0.1% lower at 15,209.25.
In Paris, the CAC 40 was flat, while the DAX 30 in Frankfurt was down 0.2%.
US stock market futures were pointed to a lower open. The Dow Jones Industrial Average, the S&P 500 index and the Nasdaq Composite all were called down 0.2%.
Analysts at ActivTrades commented: "All eyes will be on the US jobs report today as many investors remain curious to see if the actual data will echo this week's hawkish tone from Federal Reserve officials about the future of its massive bond buying program.
"Paradoxically, a weaker-than-expected jobs report would keep the prospect of a dovish Fed alive, at least for some time, and remain a strong bullish catalyst for riskier assets. On the other hand, a better NFP than estimated would strongly revive inflation worries and push the Fed to start tapering talks sooner than initially anticipated, which would become a new bearish driver for share markets."
In the FTSE 100, British Airways-parent International Consolidated Airlines Group was once again among the worst performers, down 0.9%, as the wider travel sector comes under renewed pressure.
Hopes for summer holidays abroad are fading after UK travel rules were tightened amid growing concerns over coronavirus variants and mutations. Travel bosses are facing "another lost summer" after Portugal was added to the amber travel list just weeks after the holiday hotspot reopened for British tourists.
Urging caution ahead of the scheduled domestic unlock on June 21, UK Transport Secretary Grant Shapps blamed the move on "a sort of Nepal mutation of the so-called Indian variant" having been detected, and an increased test positivity rate in the country.
Heathrow boss John Holland-Kaye has accused the UK government of "all but guaranteeing another lost summer for the travel sector".
The news comes as it was revealed that the variant first identified in India is now the dominant Covid strain in the UK.
Portugal, including the islands of Madeira and the Azores, will be removed from the green list which exempts the need to quarantine on return from 4am on Tuesday, meaning travellers will be required to self-isolate for 10 days at home.
Budget airlines easyJet, Wizz Air and Ryanair Holdings were down 1.4%, 2.6% and 1.1% respectively. AIM-listed Jet2 was 1.2% lower.
Rio Tinto said it has appointed Ben Wyatt as a non-executive director and will join the board on September 1.
The Anglo-Australian miner said Wyatt brings "extensive public policy, regulatory and international trade experience" to the board from his time as Treasurer & Aboriginal Affairs Minister in the Western Australian government. Rio Tinto shares were flat.
On AIM, boohoo Group was up 2.0% after Morgan Stanley raised the online fashion retailer to Equal Weight from Underweight.
The pound was quoted at USD1.4125 Friday at midday, higher from USD1.4108 at the London equities close Thursday, after positive UK economic data.
The UK construction sector saw its strongest rate of output growth since September 2014 in May amid a surge in residential work, IHS Markit said.
The IHS Markit-CIPS UK construction purchasing managers' index print was 64.2 points in May, up sharply from 61.6 in April. The latest reading registered above the 50.0 neutral mark for the fourth consecutive month and comfortably beat the market forecast, cited by FXStreet, of 62.3.
Markit said the UK construction sector remained on a strong recovery path in May as new order volumes increased at the fastest pace since the survey began just over 24 years ago.
On the continent, retail sales fell in Europe in April, coming in significantly worse than expected, according to estimates from Eurostat, the statistical office of the EU.
The euro stood at USD1.2110 at midday on Friday, down from USD1.2125 late Thursday.
In April, the seasonally adjusted volume of retail trade fell by 3.1% in both the euro area and in the EU as a whole, compared with March, Eurostat said. Market consensus, cited by FXStreet, expected retail sales to slip 1.2%.
Against the yen, the dollar was trading at JPY110.20, slightly down from JPY110.27.
Brent oil was quoted at USD71.50 a barrel on Friday at midday, up from USD71.25 late Thursday. Gold was priced at USD1,870.02 an ounce, marginally higher from USD1,869.72.
On the political front, Group of Seven finance ministers kick off talks on Friday, with Europeans optimistic the world's wealthiest countries will support US-backed plans for a minimum global level of corporate tax.
UK Chancellor Rishi Sunak is hosting the meeting - which is being held in person after an easing of Covid restrictions - with counterparts from Canada, France, Germany, Italy, Japan and the US.
The talks will prepare the ground for a broader summit of G7 leaders in Cornwall, southwest England starting on June 11, which will be attended by US President Joe Biden on his first foreign tour since taking office in January.
According to a draft communique seen by AFP, the finance chiefs and central bankers of the world's seven richest nations will express "strong support" and a "high level of ambition" over a global minimum corporate tax.
They then hope to reach broader agreement at a G20 finance meeting scheduled for July. Biden has called for a unified minimum corporate tax rate of 15% in negotiations with the Organisation for Economic Co-operation & Development and G20.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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