London midday: Stocks fall despite upbeat construction reading, ahead of payrolls

(Sharecast News) - London stocks had fallen into the red by midday on Friday despite an upbeat reading on the UK construction sector, as investors mulled mixed messages from Bank of England officials, with Israel's intensifying strikes against Lebanon and the upcoming US non-farm payrolls report prompting caution. The FTSE 100 was down 0.5% at 8,286.14.

Market participants were digesting comments from BoE chief economist Huw Pill, who urged caution on interest rate cuts, in contrast to more dovish comments from governor Andrew Bailey.

In a speech at the Institute of Chartered Accountants of England and Wales' annual conference, Pill said there was still "ample reason for caution" when assessing inflationary persistence.

He continued: "While further cuts in Bank Rate remain in prospect, should the economic and inflation outlook evolve broadly as expected, it will be important to guard against the risk of cutting rates either too far or too fast.

"For me, the need for such caution points to a gradual withdrawal of monetary policy restriction."

His comments came a day after Bailey told The Guardian that he held out the prospect of the BoE becoming "a bit more aggressive" in cutting rates, provided the news on inflation continued to be good.

Sterling, which fell sharply against the dollar on the back of Bailey's comments, was trading 0.3% firmer at 1.3166.

There was some good news about the construction sector, after a survey showed it grew in September at its fastest pace in two-and-a-half years.

The headline S&P Global construction purchasing managers' index rose to 57.2 in September from 53.6 in August. It remained above the 50.0 mark that separates contraction from expansion for the seventh month and signalled the steepest rate of growth for 29 months.

Tim Moore, economics director at S&P Global Market Intelligence, said: "UK construction companies indicated a decisive improvement in output growth momentum during September, driven by faster upturns across all three major categories of activity.

"A combination of lower interest rates, domestic economic stability and strong pipelines of infrastructure work have helped to boost order books in recent months.

"New project starts contributed to a moderate expansion of employment numbers and a faster rise in purchasing activity across the construction sector in September. However, greater demand for raw materials and the pass-through of higher wages by suppliers led to the steepest increase in input costs for 16 months.

"Business optimism edged down to the lowest since April, but remained much higher than the low point seen last October. Survey respondents cited rising sales enquires since the general election, as well as lower borrowing costs and the potential for stronger house building demand as factors supporting business activity expectations in September."

Looking ahead to the rest of the day, the US non-farm payrolls report for September is due at 1330 BST, along with the unemployment rate and average earnings.

Russ Mould, investment director at AJ Bell, said: "All eyes are on US jobs numbers later today as the data could provide an important clue as to the Federal Reserve's next steps with interest rates.

"The consensus forecast is for 140,000 jobs to have been added during September, roughly in line with the previous month. If that proves correct, it will signal to the Fed that the labour market isn't in the danger zone and another half percentage point rate cut at the next meeting might not be needed. However, the Fed would still be keeping a close eye on the jobs market in that situation because the loss of momentum might be a precursor to weaker data next time round."

In equity markets, JD Wetherspoon was flat as it posted a 33% drop in full-year pre-tax profit after separately disclosed items, but a 73.5% increase in pre-tax profit before separately disclosed items to £73.9m. The pub chain also said that full-year revenue rose 5.7% to £2.04bn as like-for-like sales grew 7.6%.

Watches of Switzerland gained after saying it had bought Hodinkee, a specialist website for luxury watch enthusiasts, for an undisclosed sum.

SSE was in the red as it emerged that completion of its Dogger Bank A offshore wind project has been pushed back to the second half of 2025.

Market Movers

FTSE 100 (UKX) 8,244.83 -0.46% FTSE 250 (MCX) 20,791.90 0.25% techMARK (TASX) 4,807.44 -0.17%

FTSE 100 - Risers

Schroders (SDR) 355.40p 2.36% NATWEST GROUP (NWG) 336.70p 2.12% Persimmon (PSN) 1,678.00p 1.88% Croda International (CRDA) 4,215.00p 1.66% Fresnillo (FRES) 638.50p 1.51% easyJet (EZJ) 487.00p 1.39% Standard Chartered (STAN) 807.00p 1.20% BT Group (BT.A) 144.20p 1.19% DCC (CDI) (DCC) 5,135.00p 1.18% Prudential (PRU) 711.40p 1.17%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 138.00p -3.12% Rolls-Royce Holdings (RR.) 522.00p -2.14% Relx plc (REL) 3,476.00p -2.11% Spirax Group (SPX) 7,230.00p -1.90% Smurfit Westrock (DI) (SWR) 3,531.00p -1.78% Intertek Group (ITRK) 5,035.00p -1.76% Phoenix Group Holdings (PHNX) 514.50p -1.72% AstraZeneca (AZN) 11,778.00p -1.55% London Stock Exchange Group (LSEG) 10,220.00p -1.49% Experian (EXPN) 3,902.00p -1.44%

FTSE 250 - Risers

Crest Nicholson Holdings (CRST) 196.50p 4.35% Aston Martin Lagonda Global Holdings (AML) 109.00p 3.91% Indivior (INDV) 771.50p 3.35% Hochschild Mining (HOC) 190.40p 3.14% Raspberry PI Holdings (RPI) 355.50p 3.04% Ibstock (IBST) 183.00p 2.46% Fidelity China Special Situations (FCSS) 240.50p 2.34% Moonpig Group (MOON) 212.00p 2.17% Kier Group (KIE) 139.20p 2.05% Dr. Martens (DOCS) 57.25p 2.05%

FTSE 250 - Fallers

W.A.G Payment Solutions (WPS) 79.20p -3.41% Close Brothers Group (CBG) 372.20p -2.05% Mitchells & Butlers (MAB) 281.50p -1.75% SSP Group (SSPG) 153.60p -1.48% Clarkson (CKN) 3,675.00p -1.47% Baltic Classifieds Group (BCG) 301.50p -1.31% Tritax Eurobox (GBP) (EBOX) 70.00p -1.13% XPS Pensions Group (XPS) 285.00p -1.04% TBC Bank Group (TBCG) 2,485.00p -1.00% IntegraFin Holding (IHP) 355.00p -0.98%