7th Aug 2015 09:32
LONDON (Alliance News) - London shares are lower Friday mid-morning, with FTSE-100 listed mining stocks rebounding from Thursday's losses, as the market awaits the release of US nonfarm payrolls later in the afternoon.
The FTSE 100 is down 0.1% at 6,742.91, the FTSE 250 is down 0.2% at 17,718.38, and the AIM All-Share is down 0.2% at 750.96.
In Europe, the CAC 40 in Paris and the DAX 40 in Frankfurt are both down 0.2%.
In a light European economic calendar, all eyes are on the other side of the Atlantic sea, as US nonfarm payrolls data is expected at 1330 BST. Investors are searching for clues about the timing of the first US interest rate hike by the US Federal Reserve since June 2006.
"It is nonfarm payrolls day and this could be a really important Employment Situation report," says Hantec Markets analyst Richard Perry. "The Federal Open Market Committee remains data dependent (at least members such as Jerome Powell are in any case) and a strong payrolls report today could begin to swing their vote on a rate hike."
According to FXstreet.com, economists expect a decline to 222,000 in July from a previous reading of 223,000, while Lloyds Bank expects an employment gain of 230,000, with the unemployment rate holding steady at 5.3%.
The data comes after payroll processor ADP released a report on Wednesday showing that the pace of private sector job growth slowed by more than expected to 185,000. It was expected to be at 215,000. On Thursday, first-time claims for US unemployment benefits saw some further upside in the week ended August 1. It came in at 270,000, an increase of 3,000 from the previous week's unrevised level of 267,000. Economists had expected jobless claims to rise to 273,000.
"We got lots of (sometimes contradictory) news this week: good data, weak data and statements by numerous FOMC members about a potential rate hike in September," says Commerzbank. "Today, however, is the day of truth."
The president of the Federal Reserve Bank of Atlanta and FOMC member Dennis Lockart said on Tuesday that the US economy is ready for its first increase in short-term rates and added it would take a significant deterioration in economic data to convince him not to push for a rate hike in September.
On the UK economic front, the UK visible trade deficit widened in June, data from the Office for National Statistics showed Friday. The visible trade deficit increased to GBP9.2 billion in June from GBP8.4 billion in May. But it was smaller than the expected shortfall of GBP9.3 billion. Exports fell by GBP0.3 billion, while imports rose by GBP0.5 billion in June from May.
The deficit on trade in goods and services totalled GBP1.6 billion in June, compared with a shortfall of GBP0.9 billion in May. Within this, the surplus on trade in services rose to GBP7.6 billion from GBP7.5 billion a month ago. In the second quarter, the total trade deficit narrowed by GBP2.7 billion to GBP4.8 billion, the smallest since the second quarter of 2011.
On the London Stock Exchange, miners are rebounding from Thursday's losses. Anglo American, up 3.0%, Glencore, up 2.8%, Antofagasta, up 2.3%, BHP Billiton, up 2.0%, and Rio Tinto, up 1.5%, are amongst the best blue-chip performers.
Mining stocks had been under pressure as some analysts highlight that commodity prices have been falling for the past four years, with shares in the sector are sitting at six-year lows.
Outside mining, Travis Perkins is down 2.7% after Panmure Gordon downgraded the company to Sell from Buy. Travis Perkins hiked its interim dividend by 20% as it posted a rise in pretax profit on Tuesday. However, though the broker says the multi-brand strategy is "clearly" working, it warns that trends are unlikely yo surprise on the upside.
"With a tough pricing environment and the aggressive pricing strategy within contracts, margin progression will be constrained and we now anticipate 2015 EBIT margins (ex-property) will only nudge 20 basis points higher to 6.6% (previously 7.0%)," writes Panmure's Adrian Kearsey.
Travis Perkins shares are valued at 2,110.5 pence, having reached an all-time high of of 2,270p in late-July. Panmure cuts Travis price target to 1,950p from 2,300p.
In the FTSE 250, William Hill is the worst mid-cap performer, down 6.4%. Shore Capital downgraded its recommendation the company to Hold from Buy, even though it said the bookmaker beat its pretax profit expectations in the first half of 2015.
William Hill on Friday reported a 35% drop in pretax profit in the 26 weeks ended June 30 to GBP78.7 million from GBP121.8 million in the first half of the prior year, although revenue grew to GBP808.1 million from GBP805.2 million, as it was hit by an increase in the rate of machine games duty and the introduction of point of consumption tax.
William Hill's revenue development was "modestly disappointing", Shore said, noting that machine play and underlying amounts wagered slowed to the mid-teens.
Bellway shares are flat at 2,456p after it said it sold more houses at higher prices in its 2015 financial year and said its forward order book leaves its looking strong moving into the new year. It said demand for new homes has remained strong over the course of the year, supported by the better mortgage financing environment in the UK.
The group said it secured an average of 153 reservations per week over the year, up from 148 a year earlier, with its private sales rate gathering pace in the second half on the back of new site openings and its ongoing investments in work in progress. The pricing environment for homes has also remained positive, boosted by robust housebuyer demand across the country.
By Daniel Ruiz; [email protected]
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Anglo AmericanWMH.LRio TintoBHP Billiton PLCBellwayTravis PerkinsGlencore