LONDON MARKET MIDDAY: Miners Lead Gains As Investors Await US Jobs

LONDON (Alliance News) - London stock indices were edging higher midday Friday, in a quiet trading session as investors awaited the latest US jobs report.

The report for January, which includes data on nonfarm payrolls, unemployment rate and wages, is due to be released at 1330 GMT, with expectations of a slowdown in the number of jobs added in the month from December. The consensus according to FXStreet.com expects the nonfarm payrolls to increase by 190,000 jobs from the 292,000 added in December.

James Hughes, chief market analyst at GKFX Financial Services, said December's growth in jobs was boosted by unseasonably warm weather and the January figure will be closely watched amid the recent pressure seen on global markets.

"The big swings across all asset classes since the start of the year have led to action from the [Bank of Japan] to cut interest rates into negative, they have seen the [European Central Bank] prepare the markets for more stimulus and potential negative rates, and have also made the discussion change in the UK from talks of tightening monetary policy to potentially loosening it once again," Hughes said.

"Today's number will be of added interest as it will set the tone for the Fed and their stance on monetary policy," he added.

The volatility in markets and the cracks seen in the global economy, particularly running through China, have meant that expectations for the number of Fed interest rate increases for 2016 have been reined in, but signals of strength from the US labour market could restore some optimism.

The FXStreet consensus expects the unemployment rate to remain steady at 5.0%, while average hourly earnings is expected to grow 0.3% month-on-month, from the flat reading seen in December.

"We expect a decent rebound of 0.31% m-o-m (2.25% y-o-y) in January, as we believe some of the weakness in December was due to an unfavourable calendar quirk that added more working days during the [US Bureau of Labor Statistics] survey reference pay period. This calendar quirk should be favourable for January's average hourly earnings," said economists at Nomura.

Ahead of the stream of US data, futures pointed the Dow Industrials, S&P 500 and Nasdaq 100 all flat in New York.

In London, the FTSE 100 index traded up 0.5% at 5,926.12. The FTSE 250 was up 0.8% at 16,212.72, and the AIM All-Share was flat at 693.34. European stocks were mixed with the CAC 40 in Paris up 0.2% and the DAX 30 in Frankfurt down 0.2%.

Blue-chip miners went from the worst performers in the FTSE 100 to the best in the morning session. Anglo American led gainers, up 9.4%, building on the 20% gain it made on Thursday.

Glencore was up 4.6%, even though the miner's debt was downgraded to one notch above junk by credit rating agency Standard & Poor's. S&P now rates Glencore triple B minus, from triple B previously, though its outlook has been moved to Stable as a result from Negative previously.

BG Group shares were up 1.2% after the oil and gas company reported full-year results that met market expectations, as a 16% fall in revenue caused a steep drop in underlying earnings.

The company, which is set to merge with Royal Dutch Shell, reported business performance earnings, which excludes special items and measures the underlying performance of the business, of USD1.69 billion in 2015 compared to USD4.03 billion a year earlier after revenue dropped 16%.

BG Group did not manage an overall profit, reporting a pretax loss of USD1.16 billion. However, that is still significantly narrower than the USD8.33 billion pretax loss in 2014. Before special items, BG managed a USD367.0 million profit compared to USD1.15 billion profit in 2014.

Just Eat was the best performer in the FTSE 250, up 8.6%, after the online takeaway platform said it has acquired four takeaway businesses for a total of EUR125.0 million, in a move to beef up its position in four different countries.

Just Eat said it bought takeaway food businesses from Rocket Internet in Spain and Italy, and from foodpanda in Brazil and Mexico, with the acquisitions to be paid for with existing cash on its balance sheet.

The company's share price had fallen 27% year-to-date before Friday's gains, making a particularly heavy decline in late January, when Morgan Stanley cut the company to Underweight from Equal-Weight.

In the AIM All-Share index, Frontier Resources International traded up 30% at 0.078 pence after it said it has raised GBP1.4 million through a subscription for 4.75 billion shares at a placing price of 0.030 pence per share, as it outlined plans to sell its current oil exploration ventures and invest in new projects.

The proceeds of the subscription will be used for working capital and to support investment in new projects. Frontier Resources said it does not plan to provide any further capital to its existing exploration projects, and it plans to consider the future of this projects following the completion of the subscription.

Aside from the US jobs report, there is still the US trade balance, also released at 1330 GMT, Baker Hughes US oil rig count at 1800 GMT, and US consumer credit at 2000 GMT.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

Copyright 2016 Alliance News Limited. All Rights Reserved.