London pre-open: Stocks to rise after better-than-expected UK GDP

11th Jul 2024 07:29

(Sharecast News) - London stocks were set to rise at the open on Thursday following a positive close on Wall Street and better-than-expected UK GDP data, as investors looked ahead to the latest US inflation reading.

The FTSE 100 was called to open up around 25 points.

Figures released earlier by the Office for National Statistics showed the economy grew 0.4% on the month in May following a flat reading in April. This was ahead of expectations for 0.2% growth.

Capital Economics said the stronger-than-expected rise in GDP "will be welcomed by the new Chancellor after announcing earlier this week that she will make kickstarting economic growth a 'national mission'.

"Indeed, the improving economic outlook suggests the government may benefit from the economic recovery being stronger than most forecasters anticipate."

Investors were also mulling the latest residential market survey from the Royal Institution of Chartered Surveyors, which showed that house prices were unchanged in June, but optimism sparked across the sector following the general election.

The headline house price balance in the survey was unchanged month-on-month at -17.

The new buyer enquiries balance was also broadly in line with the previous reading, easing just one point to -7. In contrast, newly agreed sales improved to -7 from -13.

However, three-month price expectations stabilised, with a net balance of 5. Prior to June's survey, the balance had been in contractionary territory for two years.

A net balance of 20 also expect a recovery in residential sales in the near-term, up from 10 in June and the highest level since January 2022.

"These results indicate that respondents have confidence in the newly-elected Labour government, which has voiced a strong commitment to boosting the housing market, aiming to deliver 1.5m homes over the next five years - a figure not hit since the 1960s," Rics noted.

Looking ahead to the rest of the day, the US consumer price index for June is due at 1330 BST.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Today's CPI update from the US will be very closely watched and determine the market mood, but investors will likely be less upset if they see any bump or blip in inflation as long as other economic data including growth and jobs continue to show further weakness."

In UK corporate news, specialist international distribution and services group Bunzl said it had added two more companies to its ever-expanding portfolio.

In June, Bunzl completed the acquisition of Spain's Sistemas De Embalaje Anper, a distributor of industrial packaging to end-users. The business generated €28m (£24m) of revenue in 2023.

It also bought Holland Packaging in the Netherlands, a distributor of bespoke and customised packaging products and supplies to e-commerce focused companies. The business had €16m of revenue last year.

Acquisition prices were not divulged.

Water provider Severn Trent hailed a strong start to the year and said it continues to expect to hit guidance.

The company delivered more than £300m of capital investment in the first quarter and remains on track to invest between £1.3bn and £1.5bn over the full year ending 31 March 2025.

"Our significant investment programme this year and capital run rate position us strongly to deliver a successful capital investment programme through AMP8," the company said.