London open: Stocks edge up ahead of construction PMI

London stocks rose in early trade on Monday as investors continued to mull over last week’s non-farm payrolls report, with a relatively quiet session expected as US markets will be closed for Labor Day.

At 0835 BST, the FTSE 100 was up 0.4% at 7,168.65.

Richard Hunter, head of markets at Interactive Investor, said: "A major miss from the US unemployment reading has had the ironic impact of reducing investor jitters.

"The Delta variant, as largely expected, has continued to impact new job openings, particularly in the areas of hospitality and retail. At the same time, there may be a reluctance for some potential workers to seek employment until the variant subsides. The non-farm payrolls figure of 235000, as compared to the expected consensus of 750000 was below even the lowest of estimates and is further proof that the strength of the US recovery may plateau until normal service can be resumed in society.

"That being said, the July figure was also revised to 1.05 million jobs added from the initial reading of 943000, and even the notoriously uneven August figure may yet be subject to revision. In contrast, the unemployment rate fell in August and wage inflation was muted, suggesting that the Federal Reserve narrative of no imminent stimulus tapering will remain in place, with December now being seen as the earliest possible time."

Hunter noted that the FTSE 100 is ahead by 10.8% so far this year, with gains driven by a combination of corporate progress following the slow but steady progress from Covid-19 and some international interest in the index as a whole on valuation grounds.

"The cyclical nature of the index and its particular exposure to the US in the form of its dollar earners will continue to be impacted by the uneven nature of the global economic recovery," he said.

On the macro front, Markit’s UK construction PMI for August is due out at 0930 BST. It’s expected to show a slowdown to 56.0 from 58.7 in July.

In corporate news, car dealership Inchcape was a high riser after Jefferies reiterated its ‘buy’ rating on the stock.

Veterinary drug maker Dechra Pharmaceuticals slid despite reporting a surge in profits and lifting its dividend as people spent more on pet welfare during Covid-19 lockdowns. The company said underlying operating profit increased by 29.2% to £162.2m on the back of revenue growth of 21.0% to £608.0m. The full-year dividend rose 18.1% to 40.50p a share.

The losses came as Stifel downgraded its rating on Dechra shares to 'hold', noting little upside.

Housebuilder Berkeley Group was also sharply lower as it went ex-dividend.

Market Movers

FTSE 100 (UKX) 7,169.04 0.43%
FTSE 250 (MCX) 24,197.28 0.01%
techMARK (TASX) 4,860.76 0.21%

FTSE 100 - Risers

London Stock Exchange Group (LSEG) 8,216.00p 1.83%
Scottish Mortgage Inv Trust (SMT) 1,400.00p 1.82%
JD Sports Fashion (JD.) 1,046.50p 1.36%
Standard Chartered (STAN) 459.20p 1.28%
Glencore (GLEN) 337.20p 1.25%
Entain (ENT) 1,964.00p 1.08%
Legal & General Group (LGEN) 282.00p 1.08%
Melrose Industries (MRO) 190.50p 1.06%
Rolls-Royce Holdings (RR.) 112.88p 1.06%
Aviva (AV.) 417.10p 0.99%

FTSE 100 - Fallers

Berkeley Group Holdings (The) (BKG) 4,782.00p -7.40%
British Land Company (BLND) 539.60p -0.41%
Bunzl (BNZL) 2,587.00p -0.27%
Vodafone Group (VOD) 120.50p -0.26%
Rio Tinto (RIO) 5,394.00p -0.26%
SEGRO (SGRO) 1,293.00p -0.23%
Avast (AVST) 592.60p -0.20%
Smith & Nephew (SN.) 1,397.00p -0.18%
SSE (SSE) 1,659.50p -0.15%
Smurfit Kappa Group (CDI) (SKG) 4,231.00p -0.14%

FTSE 250 - Risers

Auction Technology Group (ATG) 1,448.00p 2.40%
Inchcape (INCH) 933.50p 1.69%
Bytes Technology Group (BYIT) 543.00p 1.59%
Baillie Gifford Shin Nippon (BGS) 257.50p 1.58%
Chrysalis Investments Limited NPV (CHRY) 275.00p 1.48%
Murray International Trust (MYI) 1,144.00p 1.24%
Dixons Carphone (DC.) 140.20p 1.23%
Dr. Martens (DOCS) 433.60p 1.21%
Ashmore Group (ASHM) 383.00p 1.11%
Trustpilot Group (TRST) 454.00p 1.07%

FTSE 250 - Fallers

Dechra Pharmaceuticals (DPH) 4,694.00p -7.69%
Discoverie Group (DSCV) 1,192.00p -4.64%
Capital & Counties Properties (CAPC) 176.50p -1.29%
Clarkson (CKN) 3,890.00p -1.14%
SSP Group (SSPG) 264.30p -1.01%
Shaftesbury (SHB) 652.50p -0.99%
Indivior (INDV) 197.00p -0.96%
Genuit Group (GEN) 763.00p -0.91%
Great Portland Estates (GPOR) 787.00p -0.88%
Mitchells & Butlers (MAB) 283.00p -0.84%