London stocks had pared gains to trade just above the flat line by midday on Friday as caution set in ahead of the latest US non-farm payrolls report.
The FTSE 100 was up just 0.1% at 7,536.7, having kicked the session off firmly on the front foot.
Richard Hunter, head of markets at Interactive Investor, said sentiment was likely boosted by results overnight from Amazon, whose shares surged after the bell following well-received fourth-quarter numbers.
“Similarly, Snap and Pinterest were also marked sharply higher,” said Hunter. “With attention now turning to the non-farms payroll report due later, the effects of the Omicron variant spilling over to January may be a feature of the numbers.
“The consensus is for just 150,000 jobs to have been added, following a disappointing 199000 the previous month, which would confirm the status of near full employment in the US and would also serve as a reminder that interest rate rises are imminent. Of additional interest this month will be the wage growth number, where job shortages in some sectors may well be driving wage inflation, itself underlining the Federal Reserve’s hardening stance.”
The payrolls report is due at 1330 GMT, along with the unemployment rate and average earnings.
On home turf, a survey showed that growth in the construction sector hit a six-month high in January as cost pressures and worries about Omicron eased.
The IHS/Markit CIPS construction purchasing managers’ index rose to 56.3 from 54.3 in December. This marked the strongest rate out of output expansion since July last year. A reading above 50.0 indicates expansion, while a reading below signals contraction.
The survey found that new orders rose at the fastest pace since August 2021 and input buying was the strongest for six months.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “Builders enjoyed their best month since July, bouncing back from December’s doldrums as opportunities unfurled in terms of new orders, job creation and optimism offering a strong start to 2022.
“Pipelines of commercial work snapped back into action as businesses were more confident in their investment decisions and the sector came out on top with the strongest gap in output growth compared to the residential sector in almost six years. Housebuilders became January’s laggards raising concerns that higher interest rates and consumer inflation could feed into a further slowdown in the coming months as affordability rates are weakened.
“There was some light at the end of the tunnel where supply chains showed signs of improvement and the best delivery times since September 2020. However, the rapid upturn in activity is putting more pressure on suppliers still in recovery while there are shortages in skilled labour and a lack of reliable transportation adding to their woes.”
In equity markets, BP, Shell, Wood Group and Energean all gusher higher as oil prices rallied, while telecoms group BT gained after heavy losses in the previous session.
Travel food outlet operator SSP Group rose despite saying that the Omicron Covid variant and government restrictions saw trading in the eight weeks to January 30 slump to 57% of pre-pandemic levels.
The Upper Crust owner said recent weeks “have been more encouraging”, as curbs were lifted in the UK and some Continental European markets, with sales now trending positively again, driven mainly by strengthening trading in the rail sector as commuter travel returns.
On the downside, telecoms company Airtel Africa reversed earlier gains despite reporting a sharp rise in third-quarter profit, driven by strong revenue growth.
Market Movers
FTSE 100 (UKX) 7,536.72 0.10%
FTSE 250 (MCX) 21,854.93 -0.51%
techMARK (TASX) 4,390.82 0.00%
FTSE 100 – Risers
BP (BP.) 403.65p 2.87%
BT Group (BT.A) 191.00p 2.66%
Avast (AVST) 614.20p 1.72%
Polymetal International (POLY) 1,071.00p 1.61%
WPP (WPP) 1,180.00p 1.59%
Burberry Group (BRBY) 1,880.50p 1.43%
Fresnillo (FRES) 631.80p 1.38%
Informa (INF) 557.40p 1.35%
Imperial Brands (IMB) 1,747.00p 1.33%
Vodafone Group (VOD) 135.32p 1.30%
FTSE 100 – Fallers
Melrose Industries (MRO) 146.80p -3.23%
Hargreaves Lansdown (HL.) 1,311.00p -3.21%
Intermediate Capital Group (ICP) 1,869.00p -2.96%
Reckitt Benckiser Group (RKT) 5,813.00p -2.91%
Antofagasta (ANTO) 1,222.00p -2.90%
Rolls-Royce Holdings (RR.) 113.74p -2.50%
Prudential (PRU) 1,208.50p -2.19%
International Consolidated Airlines Group SA (CDI) (IAG) 154.36p -2.06%
Kingfisher (KGF) 319.90p -1.93%
Lloyds Banking Group (LLOY) 52.31p -1.86%
FTSE 250 – Risers
Wood Group (John) (WG.) 226.60p 3.75%
Energean (ENOG) 940.00p 3.07%
Oxford Biomedica (OXB) 832.00p 2.84%
Petropavlovsk (POG) 14.91p 2.54%
JTC (JTC) 759.00p 2.43%
Centamin (DI) (CEY) 91.22p 2.43%
Moneysupermarket.com Group (MONY) 206.00p 2.28%
Capricorn Energy (CNE) 206.60p 2.28%
HGCapital Trust (HGT) 439.00p 2.09%
Convatec Group (CTEC) 183.10p 2.09%
FTSE 250 – Fallers
Trustpilot Group (TRST) 158.60p -3.12%
Carnival (CCL) 1,348.00p -2.98%
TBC Bank Group (TBCG) 1,442.00p -2.83%
Capita (CPI) 30.89p -2.74%
Cineworld Group (CINE) 35.61p -2.70%
Oxford Instruments (OXIG) 2,085.00p -2.57%
National Express Group (NEX) 246.40p -2.53%
Darktrace (DARK) 373.80p -2.50%
Aston Martin Lagonda Global Holdings (AML) 1,126.50p -2.26%
Inchcape (INCH) 837.00p -2.22%
