London midday: Stocks maintain small gains ahead of payrolls
London stocks were in the green by midday on Friday amid signs of progress in Sino-US trade talks, but gains were limited as investors eyed the release of the latest US non-farm payrolls report and mulled the latest Brexit developments.
The FTSE 100 was up 0.2% at 7,414.08, while the pound was flat against the dollar at 1.3073 and 0.1% lower versus the euro at 1.1641, with European Council President Donald Tusk reportedly pressing the bloc's remaining member states to offer the UK a one-year "flexible" Brexit extension.
Theresa May, meanwhile, wrote requesting a delay of up to 30 June.
Tusk told EU officials Britain could have an option to leave once the withdrawal agreement is ratified by parliament and was expected to outline his idea at a leaders' summit in Brussels next Wednesday. He was reported to have described the plan as "the only reasonable way out" of the current impasse.
May and her team were due to hold a second day of talks with the Labour party in a bid to break the Brexit deadlock. Both the prime minister and Labour leader Jeremy Corbyn are receiving conflicting calls within their own parties about the possibility of a second Brexit referendum.
Meanwhile, the latest house price figures from lender Halifax showed a smaller than expected drop in March but are expected to remain subdued amid Brexit uncertainty.
House prices fell 1.6% on the month, compared to a 5.9% increase in February. Still, this was better than the 2.4% decline expected. On the year, prices rose 3.2% in March following a 2.8% jump the month before and versus expectations for a 2.3% increase.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said prices were still on a slowly rising path.
"The pick-up in the three-month average rate of year-over-year growth in Halifax’s measure of house prices goes against the grain of all other measures that we track, but a sustained period of falling house prices still isn't on the cards. Low unemployment and stable mortgage rates are sustaining housing demand, despite Brexit uncertainty," he said.
Market participants were also chewing over comments from US President Trump, who said on Thursday after a meeting with Chinese vice Premier Liu He that a trade deal between the two nations was about four weeks away, with some sticking points remaining. Trump said the two sides had agreed "a lot of the most difficult points" but still had some way to go.
"Confidence is reaching new levels that a trade deal will eventually be signed after many months of protracted negotiations," said FXTM research analyst Lukman Otunuga. "We believe that once the US-China trade deal is eventually announced, that could release pent-up demand and trigger a knee-jerk jump in risk-on assets. However, whether such gains are sustained depends on how markets interpret the technicalities of the deal, and what it means for a slowing global economy. As the saying goes, the devil is in the details."
The big focus on the macroeconomic front will be the non-farm payrolls report, unemployment rate and average earnings figures due out in the US at 1330 BST.
Payrolls are expected to have risen by around 180,000 in March following a very weak release in February, which showed an increase of just 20,000. Meanwhile, the unemployment rate is expected to hold steady at 3.8% and the annual average earnings rate is tipped to remain at 3.4%. On a monthly basis, it is expected to be 0.3%, which would be a fall from 0.4% in February.
In UK corporate news, GVC Holdings gained after saying it grew online gaming revenues at double-digit rates while its Ladbrokes bookmaking shops had a flat first quarter ahead of the crackdown on fixed-odds betting machines that began on 1 April.
Engineering and industrial software provider Aveva ticked up as it agreed to buy the software assets of MaxGrip, one of its partners since 2017, which optimises asset performance with reliability-centred maintenance solutions.
Power generator ContourGlobal rallied as it posted a 19% jump in 2018 earnings, boosted by acquisitions, and announced the appointment of Stefan Schellinger - former finance director of plastic and fibre products supplier Essentra - as its new chief financial officer.
Funding Circle was sharply lower as it announced plans to close its listed Funding Circle SME Income Fund.
In broker note action, shares in British Gas owner Centrica were knocked lower by a downgrade to 'add' at AlphaValue.
Stagecoach was hit by a downgrade to 'underperform' at Jefferies, while Hammerson was dented by a downgrade from Stifel and Dunelm was a little weaker after a downgrade by Peel Hunt.
Market Movers
FTSE 100 (UKX) 7,414.08 0.16%
FTSE 250 (MCX) 19,516.20 0.05%
techMARK (TASX) 3,559.37 0.02%
FTSE 100 - Risers
NMC Health (NMC) 2,551.00p 3.53%
Prudential (PRU) 1,667.50p 1.89%
Rolls-Royce Holdings (RR.) 918.60p 1.62%
Halma (HLMA) 1,776.00p 1.40%
TUI AG Reg Shs (DI) (TUI) 755.20p 1.37%
Fresnillo (FRES) 884.00p 1.31%
Ocado Group (OCDO) 1,387.50p 1.28%
Anglo American (AAL) 2,163.00p 1.19%
Rio Tinto (RIO) 4,643.00p 1.19%
Johnson Matthey (JMAT) 3,336.00p 1.18%
FTSE 100 - Fallers
SSE (SSE) 1,149.00p -1.67%
Centrica (CNA) 110.30p -1.56%
International Consolidated Airlines Group SA (CDI) (IAG) 516.60p -1.52%
Vodafone Group (VOD) 142.27p -1.52%
Berkeley Group Holdings (The) (BKG) 3,787.00p -1.46%
Paddy Power Betfair (PPB) 6,216.00p -1.36%
Reckitt Benckiser Group (RB.) 6,355.00p -1.23%
Marks & Spencer Group (MKS) 283.90p -1.11%
Sainsbury (J) (SBRY) 237.20p -1.04%
Barratt Developments (BDEV) 619.80p -0.96%
FTSE 250 - Risers
Contour Global (GLO) 192.52p 5.55%
Amigo Holdings (AMGO) 203.50p 3.30%
Acacia Mining (ACA) 201.00p 3.02%
Intermediate Capital Group (ICP) 1,147.00p 2.96%
Sirius Minerals (SXX) 21.06p 2.93%
TI Fluid Systems (TIFS) 211.00p 2.93%
Woodford Patient Capital Trust (WPCT) 83.36p 2.91%
Just Group (JUST) 63.95p 2.81%
Rank Group (RNK) 162.00p 2.53%
Cairn Energy (CNE) 162.00p 2.53%
FTSE 250 - Fallers
Funding Circle Holdings (FCH) 318.50p -7.14%
Stagecoach Group (SGC) 140.50p -4.75%
Hammerson (HMSO) 336.10p -3.31%
IG Group Holdings (IGG) 523.15p -3.26%
Metro Bank (MTRO) 851.00p -3.13%
Go-Ahead Group (GOG) 1,939.00p -2.37%
Civitas Social Housing (CSH) 90.39p -2.18%
Shaftesbury (SHB) 875.00p -1.74%
TBC Bank Group (TBCG) 1,594.00p -1.73%
Bovis Homes Group (BVS) 1,093.40p -1.67%