London pre-open: Stocks seen lower amid US shutdown woes as retailers report
London stocks were set to drop at the open on Thursday following weak Chinese inflation data and after US President Trump's decision to storm out of a meeting with Congressional Democrat leaders sparked fresh concerns about the US government shutdown.
The FTSE 100 was called to open 16 points lower at 6,890.
Senate Minority leader Chuck Schumer said Trump "slammed the table" before abruptly leaving the meeting on Wednesday after House of Representatives Speaker Nancy Pelosi said she would not approve funding for Trump's Mexican border wall.
CMC Markets analyst Michael Hewson said: "US markets managed to close higher for the fourth day in succession, with the S&P500 posting its best run since September last year, though they closed off their highs on reports that talks between President Trump and his Democrat counterpart Nancy Pelosi, broke down in acrimony, as they looked for an agreement to reopen the government.
"This modest pullback is likely to see markets in Europe open slightly lower this morning, with the declining inflationary outlook reinforced this morning by sharp declines in both China CPI and PPI for December which came in at 1.9% and 0.9% respectively. What was most noticeable was the plunge in factory gate prices or PPI, from 2.7% to 0.9%. This would suggest the risk that China might once again start to export a deflationary impulse across the rest of the global economy, given that trends in PPI tend to manifest themselves in the headline CPI numbers a few months later."
Retailers were in focus as M&S, Tesco and Halfords put out updates and after data from the British Retail Consortium revealed that retailers suffered their worst Christmas for 10 years in December amid worries about Brexit and weak consumer confidence.
Total sales growth dropped to zero in for the first time since 2008, with total like-for-like UK retail sales down 0.7% in December compared with a 0.6% increase in the same month the year before.
In corporate news, Marks & Spencer maintained full year guidance as third quarter group total revenue fell 3.9% to £3.04bn.
In the UK, total revenue over the Christmas period fell 2.7% to £2.7bn on a constant currency basis. Clothing & home product like-for-like revenue was weaker than expected, down 2.4% to£1.1bn against a consensus of 1.8% while food was ahead of forecasts, down 2.1% to £1.6bn against a consensus 3%.
Grocery sector market leader Tesco outshone its big four listed rivals over Christmas, with sales growth that exceeded the market and analysts' forecasts.
Group sales swelled 0.5% in the third quarter ending 24 November and 1.5% in the six-week festive period to 5 January, giving 19-week growth of 0.8%.
Motoring and cycling product and service retailer Halfords Group updated the market on its trading performance for the 14 weeks ended 4 January, reporting a 1.4% fall in like-for-like group revenue.
The company said that consisted of 1.4% growth in revenue from its autocentres, which was offset by a 2.2% decline in like-for-like revenue in its retail operation. That was the result of mild weather, and weak consumer confidence, the Halfords board explained.