LONDON MARKET MIDDAY: Stocks edge higher ahead of US jobs report

(Alliance News) - Stock prices in London were slightly higher at midday on Friday as investors look ahead trepidatiously to the US jobs report for June at 1330 BST, while GlaxoSmithKline leapt to the defence of its under-fire chief executive.

Economists expect US nonfarm payrolls to rise by 690,000 in June and the unemployment rate to edge down to 5.7% from 5.8% in May, according to consensus cited by FXStreet.

The FTSE 100 index was up 10.64 points, or 0.2%, at 7,135.80. The mid-cap FTSE 250 index was up 104.41 points, or 0.5%, at 22,727.18. The AIM All-Share index was up 4.81 points, or 0.4%, at 1,264.52.

The Cboe UK 100 index was up 0.1% at 709.80. The Cboe 250 was up 0.6% at 20,444.73, and the Cboe Small Companies was up 0.1% at 15,426.10.

In Paris, the CAC 40 was up 0.2%, while Frankfurt's DAX 30 was up 0.5%.

"The FTSE is edging higher, shrugging off rising Covid cases as homebuilders lead the charge. Jefferies is maintaining its positive stance over UK homebuilders, keeping the likes of Taylor Wimpey and Barratt Developments buoyant," commented Oanda Markets analyst Sophie Griffiths.

Barratt Developments was up 2.0% after Jefferies upgraded the housebuilder to Buy from Hold.

Peers Taylor Wimpey, Persimmon and Berkeley were up 1.0%, 0.8% and 0.3%, respectively, as Jefferies took an upbeat stance on the sector, despite the expiry of the UK government's stamp duty holiday on Wednesday.

In the FTSE 250, Bellway was up 2.5% after Jefferies raised the Newcastle-based housebuilder to Buy from Hold.

New York stock market futures were pointed marginally higher ahead of the US jobs numbers.

On the corporate front, Johnson & Johnson was 0.1% higher in pre-market trade in New York. The drugmaker said new data has shown its single-shot Covid vaccine generates a "strong, persistent activity" against the India, or Delta, variant.

The data showed that the J&J's Covid-19 vaccine elicited "neutralising antibody activity" against the Delta variant at an even higher level than what was recently observed for the Beta variant in South Africa where high efficacy against severe and critical disease was demonstrated, J&J explained.

In the FTSE 100, Informa was the best performer, up 2.9%, after Berenberg raised the events and publishing company to Buy from Hold.

GlaxoSmithKline was up 0.1%. The drugmaker said Chief Executive Emma Walmsley is the right leader for the core pharmaceutical and vaccines business after the consumer division gets spun off, in response to a scathing open letter from activist investor Elliott Management Corp.

GSK is planning to spin off its consumer healthcare division, which includes toothpaste and over-the-counter medicines, from its pharmaceuticals and vaccines business, which it calls New GSK.

On Thursday, Elliott said it had built a significant stake in the London-based company, which has failed to realise its value after years of poor performance.

On Friday, the Brentford-based firm said its largest shareholders support its strategy and have confidence in its leadership.

At other end of the large-caps, Rightmove was down 1.0% after UBS downgraded the property portal to Neutral from Buy.

Sterling slipped after Bank of England Governor Andrew Bailey on Thursday said recent consumer price pressures should prove temporary.

The pound was quoted at USD1.3745 at midday on Friday, down from USD1.3775 at the London equities close Thursday and declining further from the GBP1.39 mark reached at the start of the week.

The euro stood at USD1.1825, lower from USD1.1851. Against the yen, the dollar was quoted at JPY111.50, little changed from JPY111.59.

Analysts at ActivTrades explained "The US dollar remains on the front foot during Friday trading, with the publication of the US nonfarm payrolls employment data just a few hours away. Having ended every trading session so far this week in the green, the greenback hit a fresh multi-month high this morning as the markets price in a positive employment data number, which in today's case will be on or above the consensus of 690,000.

"An encouraging number of new jobs created during the month of June will strengthen the case for earlier tapering of the ongoing monetary stimulus, offering more support to the greenback. Conversely, a figure falling short of expectations will diminish the scope for further dollar gains in the short-term."

Brent oil was quoted at USD75.80 a barrel on Friday at midday, up from USD75.52 at the London equities close Thursday. Gold was quoted at USD1,785.45 an ounce, higher against USD1,769.16 late Thursday.

Major oil-producing countries on Thursday failed to agree to boost output in August to meet growing demand and limit recent price rises, adjourning their meeting to Friday.

The 13 members of OPEC and 10 allies were expected to make a decision to continue to moderately increase output beyond July.

The OPEC+ grouping cut crude production after the pandemic sent oil prices crashing last year. But the group has slightly increased production since early May. Oil prices have recovered, this week reaching levels last seen in October 2018. OPEC members led by Saudi Arabia conferred Thursday via a teleconference.

But a subsequent technical meeting of OPEC members together with their 10 allies led by Russia failed to reach consensus, leading to discussions being postponed until Friday, according to an OPEC statement.

"The members of the oil cartel clashed yesterday, with the United Arab Emirates blocking the agreement until the baseline for its production cuts was adjusted. This forced the group to postpone the meeting, raising concerns about the supply of oil in the coming months. The impasse between the UAE and the rest of the group could mean that oil supply will not be increased at all under the current terms until April 2022, pushing oil prices even higher and contributing to the already concerning spike in inflation," said AvaTrade analyst Naeem Aslam.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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