London pre-open: Stocks seen weaker after disappointing Chinese GDP

15th Jul 2024 07:30

(Sharecast News) - London stocks were set to fall at the open on Monday as investors digested disappointing Chinese GDP figures.

The FTSE 100 was called to open down around 22 points.

Data released earlier by China's National Bureau of Statistics showed that second-quarter growth slowed to 4.7% year-on-from 5.3% in the first quarter, missing expectations of 5.1% growth.

ING said "weak consumption and property continued to be a drag on growth".

It added that more policy support will be needed in order to achieve this year's 5% growth target.

On home shores, investors will be mulling the latest data from Rightmove, which showed that house prices dipped in July as the general election, international sporting events and the start of the summer holidays unsettled the market.

According to Rightmove's latest house price index, house prices eased 0.4% in July month-on-month, compared to June, when growth was flat. On an annual basis, prices ticked up 0.4%.

The national average asking price now stands at £373,493.

Rightmove said the drop was bigger than usual for this time of year, with new sellers hit with a series of distractions, including Euro 2024 and weeks of campaigning ahead of the 4 July general election.

The 20-year average for July is a 0.2% decline.

However, Rightmove added that growing expectations for an imminent cut in interest rates, along with a more stable political outlook following Labour's historic win, boded well for the autumn market.

The number of sales being agreed was also an "encouraging" 15% above the same period a year ago, it noted.

Tim Bannister, director of property science at Rightmove, said: "Three major uncertainties hanging over the property market at the start of the year were when the first interest rate cut would be, and the timing and result of the general election.

"We've now got the political certainty of a new government with a large majority, which we expect will help home-mover confidence. It's very early days, but the new chancellor's immediately announcements on housebuilding targets and planning reform are positive signs."

The cost of borrowing currently remains at a 16-year high of 5.25%. But the market widely expects the first cut in either August or September.

In corporate news, luxury goods maker Burberry said it has suspended dividend payments and that it expects to post an interim operating loss after a slump in first-quarter revenues.

The company said retail sales in the 13 weeks to June 29 fell by 22% to £458m.

"The slowdown in trading we experienced in Q1 FY25 continued into July. If this trend were to continue through the current quarter, we would expect to report a H1 FY25 operating loss and FY25 operating profit to be below current consensus," Burberry said.

Elsewhere, Me Group International reported a strong first-half financial and strategic performance, with a 4.6% revenue increase to £150.4m and a 10.3% rise in profit before tax to £30.0m.

The FTSE 250 company said growth was driven by the expanding Wash.ME laundry operations and increased installations of Revolution laundry machines, alongside a 2.4% revenue increase in Photo.ME machines.

It said it maintained a robust balance sheet with significant cash generation, supporting investments and a 16.2% increase in the interim dividend, while projecting continued growth and record profitability for the full year.