London pre-open: FTSE seen up as investors mull consumer confidence, retail sales

London stocks were set to rise at the open on Friday following heavy losses in the previous session, as investors digest the latest UK retail sales figures.

The FTSE 100 was called to open 38 points higher at 7,785.

CMC Markets analyst Michael Hewson said: "As we look ahead to today’s European open, we look set for a modest rebound after the steep losses of yesterday, however it's hard to see how we won’t give back some of this year’s gains, after surging out of the blocks in the first two weeks of this year."

Data out earlier from the Office for National Statistics showed that retail sales unexpectedly declined in the run-up to Christmas.

Sales fell 1% from November, and were down 5.8% on December 2021, as shoppers reined in spending.

According to the ONS, retailers said that shoppers had been "cutting back on spending because of increased prices and affordability concerns".

Elsewhere, the latest survey from GfK showed that UK consumer confidence faltered in January, as concerns about the strength of the economy weighed heavily.

The January GfK consumer confidence index fell three points to -45, ending December’s weak rally, when the index nudged up two points to -42.

Within that, expectations for the general economic situation over the next 12 months dipped one point to -54, although the outlook for the personal financial situation moved up two points to -27.

Both the major purchase and savings indices fell six points, however, to -40 and 14 respectively.

Joe Staton, client strategy director at GfK, said: "Consumers have a New Year hangover of the economic kind, with high levels of pessimism over the state of the wider economy. And unlike a conventional hangover, this one won’t vanish quickly.

"The only glimmer of hope is the slight uptick in the outlook for [the] personal financial situation, but this is of little comfort as it is still 25 points lower than this time last year."

He concluded: "With inflation continuing to swallow up pay rises and the prospect of some shocking energy bills landing soon, the forecast for consumer confidence this year is not looking good."

In corporate news, power generator SSE upgraded annual earnings expectations as higher gas prices and better storage offset lower-than-expected renewables output.

The company lifted adjusted earnings per share to more than 150 pence from previous guidance of at least 120 pence.

"This reflects the strength and stability of its balanced mix of regulated and market-facing businesses with continuing good availability and supportive market conditions leading to flexible generation plant and gas storage optimisation significantly offsetting lower than planned renewables output and hedge buy-back costs," the company said in a trading update.

4imprint said pre-tax profit for 2022 is expected to be above the upper end of the range of analysts' forecasts, and not less than $100m following a particularly strong finish to the year.

"The board is delighted with the group's progress in 2022, which reflects clarity of strategy, the flexibility and resilience of the business model and the outstanding dedication of the team," it said. "The group enters 2023 with optimism."