London midday: Stocks extend gains ahead of payrolls

London stocks had extended gains by midday on Friday as investors digested a raft of UK data releases and looked ahead to the US non-farm payrolls report.

The FTSE 100 was up 0.8% at 8,175.71.

The payrolls report for October is due at 1230 GMT, along with the unemployment rate and average earnings.

Richard Hunter, head of markets at Interactive Investor, said: "The next test which rounds off a packed week of updates comes later with the release of the non-farm payrolls report, where the current consensus is that 113,000 jobs will have been added last month, compared to 254,000 in September and where unemployment is expected to remain steady at 4.1%."

On home shores, a survey showed that manufacturing activity contracted in October ahead of the Budget.

The seasonally adjusted S&P Global purchasing managers index for the sector fell to 49.9 from 51.5 in September. This was below the flash estimate of 50.3 and marked the first time the PMI has fallen below the neutral 50.0 mark that separates contraction from expansion since April.

The survey found that a lack of market optimism, slower economic growth, stretched supply chains and concerns about the potential impacts of the Budget led to reduced intakes of new work and a near-stalling of output growth.

Rob Dobson, director at S&P Global Market Intelligence, said: "UK manufacturing started the final quarter of the year on an uncertain footing amid speculation on government policies ahead of the Budget, which was widely reported to have led to a wait-and-see approach on investment and spending. This domestic headwind, combined with an ongoing loss of export business, led to the first outright contraction in new work intakes since April. Output growth came close to stalling as a result.

"The generally lacklustre environment was also reflected in the headline PMI slipping below its neutral 50.0 mark and business optimism hovering only slightly above September's nine-month low.

"There was better news on the price front. Input cost inflation fell to a ten-month low, easing to one of the greatest extents in the 33-year survey history. Selling price inflation also moderated. This may provide some headroom for policy makers to support growth if demand weakens.

"The November PMI will be especially keenly anticipated to see the near-term impact of the Budget on business conditions and in particular the effect on confidence."

Elsewhere, figures from Nationwide revealed that house price growth slowed in October.

House prices ticked up 0.1% on the month following 0.6% growth in September. This was below expectations for 0.3% growth.

On the year, house prices increased 2.4% in October, down from 3.2% a month earlier.

The average price of a home stood at £265, 738, down from £266,094 in September.

Nationwide chief economist Robert Gardner said: "Housing market activity has remained relatively resilient in recent months, with the number of mortgage approvals approaching the levels seen pre-pandemic, despite the significantly higher interest rate environment.

"Solid labour market conditions, with low levels of unemployment and strong income gains, even after taking account of inflation, have helped underpin a steady rise in activity and house prices since the start of the year.

"Providing the economy continues to recover steadily, as we expect, housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth."

Investors were also mulling the latest retail industry data, which showed that footfall declined in October, reversing much of September’s surprise uplift.

Footfall jumped 3.3% in September, the first rise in over year and a notable improvement on August’s 0.4% dip.

But according to the latest data from the British Retail Consortium and Sensormatic, total UK footfall decreased 1.1% in October, dampening hopes for the start of a more positive trend.

High streets recorded a 3.6% slide, compared to September’s 0.9% uptick, while shopping centre footfall was down 1.6%. In September, it rose 2.3%.

Retail park footfall increased by 4.8%. But that was below September’s 7.3% spike.

Andy Sumpter, EMEA retail consultant at Sensormatic, said: "While this will be disappointing for many retailers, who may have hoped the positive figures in September would spell the start of a more consistent uptick in store traffic, it perhaps shouldn’t come as a surprise.

"We expect to see a bumpy recovery as myriad market conditions - from the cost of living to shaky consumer confidence around the Budget - continue to make footfall performance volatile."

Helen Dickinson, chief executive of the British Retail Consortium, said the timing of half term had made for tough comparatives.

However, she added: "Retailers have seen footfall consistently fall since the pandemic. Thriving high streets and town centres not only good for local economies but also form a key part of the social fabric of communities up and down the country.

"Retailers needs a policy environment that supports growth and investment."

In equity markets, Reckitt Benckiser surged to the top of the FTSE 100 after its subsidiary Mead Johnson was cleared of liability in a US trial investigating whether it - and Abbott - hid bowel disease risks associated with premature-baby formula.

Schroders was boosted by an upgrade to ‘outperform’ from ‘neutral’ at BNP Paribas Exane ahead of third-quarter results next week, as it pointed to improving momentum and an attractive valuation.

"We see these results as a potential strong positive catalyst for the stock where the company will outline positive flows in Q3 and beyond and positive fund performance momentum," it said.

CMC Markets nudged up as it announced a long-term partnership with New Zealand bank ASB, to provide ASB's clients with a customised trading platform, integrating CMC's technology with the bank’s existing systems.

Market Movers

FTSE 100 (UKX) 8,175.71 0.81%
FTSE 250 (MCX) 20,435.86 0.23%
techMARK (TASX) 4,631.66 0.50%

FTSE 100 - Risers

Reckitt Benckiser Group (RKT) 5,090.00p 8.67%
Schroders (SDR) 357.80p 4.01%
GSK (GSK) 1,426.50p 2.44%
Beazley (BEZ) 771.00p 2.05%
Croda International (CRDA) 3,774.00p 1.86%
Rolls-Royce Holdings (RR.) 545.20p 1.83%
Spirax Group (SPX) 6,565.00p 1.70%
BP (BP.) 382.60p 1.58%
Imperial Brands (IMB) 2,373.00p 1.54%
Tesco (TSCO) 347.20p 1.46%

FTSE 100 - Fallers

Smurfit Westrock (DI) (SWR) 3,967.00p -1.20%
Smith (DS) (SMDS) 539.00p -1.19%
Entain (ENT) 738.00p -0.94%
Vistry Group (VTY) 902.50p -0.77%
International Consolidated Airlines Group SA (CDI) (IAG) 209.50p -0.66%
JD Sports Fashion (JD.) 123.20p -0.65%
Haleon (HLN) 370.50p -0.51%
Sainsbury (J) (SBRY) 265.20p -0.38%
British Land Company (BLND) 397.40p -0.30%
Flutter Entertainment (DI) (FLTR) 18,095.00p -0.25%

FTSE 250 - Risers

Bloomsbury Publishing (BMY) 712.00p 4.71%
Victrex plc (VCT) 881.00p 3.40%
Auction Technology Group (ATG) 464.50p 3.11%
Senior (SNR) 136.00p 2.72%
W.A.G Payment Solutions (WPS) 82.20p 2.24%
Close Brothers Group (CBG) 233.00p 2.19%
Hilton Food Group (HFG) 919.00p 2.11%
Helios Towers (HTWS) 108.60p 2.07%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 684.90p 2.03%
Domino's Pizza Group (DOM) 307.20p 1.99%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 111.20p -2.80%
Energean (ENOG) 980.00p -2.58%
Ithaca Energy (ITH) 99.50p -2.07%
Carnival (CCL) 1,528.00p -1.86%
Wizz Air Holdings (WIZZ) 1,360.00p -1.31%
Raspberry PI Holdings (RPI) 345.30p -1.29%
RIT Capital Partners (RCP) 1,830.00p -1.19%
Wetherspoon (J.D.) (JDW) 607.00p -1.14%
IP Group (IPO) 45.35p -1.09%
Elementis (ELM) 132.00p -1.05%