(Alliance News) - The FTSE 100 opened higher on Friday as investors hoped that US jobs data later in the day would seal the deal on the Federal Reserve holding interest rates steady at its next meeting.
"A tighter-than-expected job market will add fuel to the inflation fire, while a slowdown would be welcome and suggest that monetary tightening is starting to have some effect," explained Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
The FTSE 100 index opened up 33.64 points, or 0.5%, at 7,472.95. The FTSE 250 was down 20.14 points, or 0.1%, at 18,584.73, and the AIM All-Share was down 1.53 points, or 0.2%, at 740.40.
The Cboe UK 100 was up 0.3% at 744.01, the Cboe UK 250 was marginally lower at 16,249.59, and the Cboe Small Companies was up 0.3% at 13,026.19.
The eagerly-awaited US non-farm payroll data will be released at 1330 BST. Markets are expecting nonfarm payrolls to rise by 170,000 in August, down from 187,000 in July.
Earlier in the week, the ADP National Employment Report showed job growth in the US private sector slowed significantly in August.
Private sector employment increased by 177,000 jobs, ADP said, down sharply from 371,000 jobs in July and below FXStreet-cited consensus, which had expected 195,000 jobs to be added.
Michael Hewson, chief market analyst at CMC Markets, said if the non-farm payrolls report shows a "modest slowdown" in the rate of jobs growth similar to that seen in the ADP jobs report, then there could be further gains in stock markets, as bets increase that the Federal Reserve may be done when it comes to further rate hikes.
"At the very least it could go some way to signalling a pause as the US central bank looks to assess the effects recent rate hikes are having on the US economy," he said.
Currently, markets see an 89% chance of the US central holding rates steady at its next meeting this month and a 56% chance of this being the case again in the Fed's November meeting, according to the CME Fed Watch Tool.
The dollar was slightly softer ahead of the payroll numbers. The pound was quoted at USD1.2686 at early on Friday in London, up from USD1.2671 at the close on Thursday. The euro stood at USD1.0858, higher against USD1.0847. Against the yen, the dollar was trading at JPY145.46, lower compared to JPY145.65.
In London, Shell and BP were among the top blue-chip performers in early morning trade, up 1.5% and 2.7% respectively, as oil prices continued their upward trajectory.
Brent oil was quoted at USD87.05 a barrel at early in London on Friday, up from USD85.88 late Thursday.
Supply tightening was the main driver behind the rise, with Opec+ production cuts expected to be extended and storm Idalia continuing to threaten oil production in the US Gulf Coast.
Johnson Matthey was the top performer in the FTSE 100 in early morning trade, surging 14%.
On Wednesday, FTSE Russell confirmed that the speciality chemicals firm would be removed from London's flagship index from the market open on Monday, September 18.
In the FTSE 250, Diversified Energy added 1.3%.
The US-focused energy company said its latest half-year results reflected the "resilience" and "consistency" of its business as it reported record average net daily production and higher adjusted earnings.
In the six months ended June 30, Diversified reported a "record" average net daily production of 852 million cubic feet equivalent per day, up from 816 million cubic feet equivalent per day the year prior.
Its adjusted earnings before interest, tax, depreciation and amortisation increased to USD283 million from USD224 million as its adjusted cost per unit reduced to USD1.66 per million cubic feet equivalent from USD1.84 per million cubic feet equivalent.
Elsewhere in London, CentralNic rose 1.0% after it announced acquired Adrenalads for USD2.4 million in cash.
The internet services holding company that develops and manages online marketplaces described Adrenalads as a "premium source" of tier-1 search and direct navigation traffic, catering specifically to e-commerce platforms.
It is expected the acquisition will be immediately earnings accretive.
In European equities on Friday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both 0.1% higher.
In Tokyo on Friday, the Nikkei 225 index closed up 0.3%. The S&P/ASX 200 in Sydney closed down 0.4%.
In China, the Shanghai Composite was closed up 0.4%, while the Hang Seng index in Hong Kong unexpectedly closed on Friday as super typhoon Saola barrelled towards China's southern coast.
The finance hub issued a T8 threat warning – the city's third-highest – around 0240 HKT and the city's bourse said the" morning trading sessions for all markets will be cancelled".
On China's mainland, authorities issued the highest typhoon warning for the storm, which state media said would make landfall "in the coastal areas stretching from Huilai to Hong Kong" on Friday afternoon or evening.
Gold was quoted at USD1,943.08 an ounce early Friday, higher against USD1,942.51 at the London equities close on Thursday.
Still to come in Friday's economic calendar, the UK manufacturing PMI will be released at 0930 BST.
By Heather Rydings, Alliance News senior economics reporter
Comments and questions to newsroom@alliancenews.com
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