London pre-open: Stocks to fall after US and Asian losses; retail sales in focus
By Michele Maatouk
Date: Friday 24 May 2024
(Sharecast News) - London stocks were set to fall at the open on Friday following heavy losses in the US and Asia, as investors mulled a bigger-than-expected drop in UK retail sales.
The FTSE 100 was called to open around 80 points lower.
Figures released earlier by the Office for National Statistics showed that retail sales fell 2.3% in April following a downwardly-revised 0.2% decline in March and versus expectations for a 0.5% drop.
On the year, sales were down 2.7% in April.
The ONS said sales volumes fell across most sectors, with clothing retailers, sports equipment, games and toys stores, and furniture stores doing badly as poor weather reduced footfall.
Elsewhere, a survey showed that UK consumer confidence sparked in May as households become more upbeat about the economy and their finances.
The latest GfK consumer confidence index, published on Friday, rose two points in May to -17.
Within that, expectations for the general economic situation over the next year increased by four points to -17. The forward-looking personal finance situation also jumped, up five points to 7.
The only sub-measure that fell was the major purchase index, which dipped a point to -26.
Joe Staton, client strategy director at GfK, said: "With the latest drop in headline inflation and the prospect of interest rate cuts in due course, the trend is certainly positive after a long period of stasis which has seen the overall index score stuck in the doldrums.
"All-in-all, consumers are clearly sensing that conditions are improving. This good result anticipates further growth in confidence in the months to come."
However, Staton added that the dip in the major purchase index "reinforces the fact that the cost of living crisis is still a day-to-day reality for all of us".
Consumer confidence has been hit hard in recent years, undermined by surging inflation, rising interest rates and the cost of living crisis.
However, with inflation now standing at 2.3%, the Bank of England is widely expected to cut interest rates this summer.
Following multiple rises, the cost of borrowing has now been left on hold at a 16-year high of 5.25% since August 2023.
In corporate news, oil services company Wood Group said it had rejected a third improved takeover proposal from Dubai-based engineering and consulting company Sidara, saying it continued to "significantly undervalue" the group and its prospects.
Sidara upped its latest offer by 3.8% to 220p-a-share on May 21 from 212p a week ago and the 205p initial approach. It has until June 5 to make a firm bid.
Intertek hailed a strong start to the year, with 7% growth in like-for-like revenue.
This was driven by a strong recovery in Consumer Products, whilst Corporate Assurance, Health and Safety, Industry and Infrastructure and World of Energy continued to benefit from increased demand for the group's ATIC solutions.
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