LONDON (Alliance News) - UK stocks opened tentatively on Friday. Following a mixed lead overnight from the US and Asia, there is little clear direction in London, as traders prefer to wait for the big US unemployment report due Friday afternoon. By mid-morning, the FTSE 100 and AIM All-Share are about flat, while the FTSE 250 is down 0.2%.
Of the stocks that are moving, Tullow Oil leads the blue-chip gainers, up 1.9% on the news that the Wisting Central exploration well offshore Norway, in which it has a 20% interest, has made the first ever oil discovery in the Hoop-Maud Basin in the Barents Sea.
Airlines are gaining again, still recovering from a sell-off earlier in the week when Ryanair released a profit warning. Since easyJet released positive air-traffic statistics Thursday, the sector has been recovering. EasyJet is up 1%, while International Consolidated Airlines is up 0.5%.
UK data released Friday has been softer than of late. The Halifax house price index for August recorded an monthly increase in prices of 0.4%, a slowdown from the previous month's 0.9% rise and a miss of the 0.7% consensus forecast. The index recorded a yearly increase of 5.4%.
UK production numbers also were slightly weaker than expected. Industrial production for July was flat, against forecast growth of 0.1%, while manufacturing production increased by 0.2% against 0.3% forecast.
The numbers may ease pressure on Bank of England Governor Mark Carney, however, as Carney had recently been forced to defend his forward guidance in the face of data releases showing a pick-up in the UK economy. Carney's guidance, that interest rates will not rise until the current unemployment rate of 7.8% falls below 7.0%, does seem to have had an effect on consumers however. Results from the BoE's consumer survey showed Thursday that only 29% of people expect a rate rise within the next year, down from 34% last month and the lowest percentage since 2008.
The pound has slipped back below 1.56 against the dollar following the weaker data readings, currently trading USD1.5575. The EURGBP cross trades at 0.8430, as the euro records daily gains against sterling for the first time in two weeks. The release of German industrial production numbers, due at 1100BST, is the next risk event for the currency pair
Oil and gold are both close to flat on the day as markets everywhere wait for the US jobs report, due at 1330BST. Expectation is for an increase in non-farm payrolls to 181,000, from 162,000 previously, and for unchanged headline unemployment of 7.4%. The numbers will be watched closely for indications of when the Fed will being tapering its quantitative-easing program, as many predict a reduction in asset purchases from this month's meeting. With some commentators calling the reading the most important data release of the year so far, any surprise drop in unemployment is likely to reinforce tapering fear, and drive stocks lower globally.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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Tullow Oil (TLW)
International Airlines (IAG)
easyJet (EZJ)