London pre-open: Stocks to rise as investors eye non-farm payrolls

London stocks were set to rise at the open on Friday, taking their cue from a positive close on Wall Street amid rate cut hopes and optimism over trade talks between the US and Mexico, as investors eye the release of the latest non-farm payrolls report.

The FTSE 100 was called to open 20 points higher at 7,279.

London Capital Group analyst Jasper Lawler said: "The prospect of some good news over trade turned US financial markets around. Asia followed suit and European bourses are pointing to a stronger start on the open.

"There is a good chance that the markets are getting ahead of themselves here. History tells us that there have only been a limited number of occasions where Trump hasn’t stuck to his word over a trade tariff threat. Mexico is pushing for more time but we are less convinced than the markets that Trump will grant it."

Senior officials from both countries said on Thursday that they were discussing significant changes in asylum rules and border enforcement that could stop President Trump from imposing tariffs on all Mexican imports.

All eyes will be on the US non-farm payrolls report, unemployment rate and average earnings at 1330 BST. Lawler said 175,000 jobs are expected to have been created in May, down from 263,000 in April. The unemployment rate is expected to remain steady at 3.6%, while average hourly earnings are forecast to tick higher to 0.3% month-on-month from 0.2% in April.

"In some ways this NFP figure will be a gateway for the heightened expectations of a US rate cut," Lawler said. "The near-term direction for the markets depends on whether the gate is open or shut. Should the NFP disappoint expectations of a Fed cut potentially as soon as June or July could rise."

On the UK data front, Halifax house prices for May are due at 0830 BST.

In corporate news, iron ore pellet producer Ferrexpo said group first half EBITDA was expected to increase “materially”, due to higher prices and sales.

It added that while average production costs were likely to rise year on year, inflation had been lower than expected due to a fall in the Brent oil price and the European gas price partially offset by an appreciation of the Ukrainian hryvnia against the dollar.

GlaxoSmithKline has received approval from the US Food and Drug Administration for two new methods for administering Nucala, a drug initially developed for maintenance treatment for patients with severe eosinophilic asthma (SEA).

The new approvals are for the treatment's use with an autoinjector and a pre-filled safety syringe, which will give patients the option for Nucala to be administered outside of a clinical setting.

Games Workshop said sales and profit growth extended to the end of its financial year as it reiterated guidance for annual results. Sales for the year to 2 June will be about £254m and pre-tax profit will be at least £80m, it said.

Smiths Group has appointed JehanZeb Noor as chief executive officer of Smiths Medical.

JehanZeb. Who will be part of the company's Executive Committee and report to CEO Andy Reynolds Smith, will take up the role on 1 July. He will oversee the separation of the division, which is expected to be completed during the first half of CY2020.