London pre-open: Stocks seen lower; retail sales surge in June
London stocks were set for a weaker open on Friday following downbeat US and Asian sessions, as investors eyed the release of the latest UK manufacturing and services data.
The FTSE 100 was called to open 61 points lower at 6,150.
CMC Markets analyst Michael Hewson said: "US markets underwent a softer session yesterday as a rise in weekly jobless claims, the first week on week increase since March, cast doubt on the prospects of the US economy, over the next few weeks.
"As suspected the recent reimposition of lockdown measures across a number of states has seen the number of people making claims start to move higher, with 1.4m people claiming last week, up from 1.3m the week before.
"Continuing claims was more encouraging, falling to 16.2m, however this is a lagging indicator, and further increases in the weekly jobless claim’s numbers over the next two to three weeks is likely to halt the progress in this area as well, casting further shade on the markets over-optimistic v-shaped scenario.
"This concern is likely to have been one of the catalysts behind yesterday’s slide in US markets, along with further sharp increases in US coronavirus cases, as well as further delays to a new stimulus bill. The tech sector, and specifically the Nasdaq, bore the brunt of yesterday’s sell off, not surprisingly considering it has been the main driver of the current move higher and which again, made new record highs this week.
"This weakness is set to manifest itself in a much weaker European open this morning, after a similarly weak Asia session, that has also seen China confirm its countermeasures to the US’s closure of its Houston consulate."
Investors will also be digesting the latest figures from the Office for National Statistics, which showed that retail sales rose 13.9% on the month in June following a revised 12.3% increase the month before and beating expectations of an 8% jump.
ONS deputy national statistician for Economic Statistics Jonathan Athow said: "Retail continued to recover from the sharp falls seen in April, with overall sales now almost back to pre-pandemic levels. But there are some dramatic differences in sales across the retail industry.
"Food sales continue above their pre-pandemic levels due to the closure of cafes, restaurants and pubs. Online sales have risen to record levels, and now count for £3 in every £10 spent. On the other hand, clothing sales remain depressed and across the high street sales in non-food stores are down by around one-third on pre-pandemic levels.
"The latest three months as a whole still saw the weakest quarterly growth on record."
Still to come, Markit's services and manufacturing PMIs are at 0930 BST.
In corporate news, plumbing and heating supplies group Ferguson said trading had improved steadily since the height of coronavirus lockdowns in April.
The company said revenue from continuing operations was down 3.6% for the period from May 1 to April 22, compared with a 15.3% fall in April. Ferguson’s online continued to grow well with revenues 30.4% ahead of last year.
AstraZeneca announced that ‘Breztri Aerosphere’, or budesonide, glycopyrrolate and formoterol fumarate, has been approved in the United States for the maintenance treatment of patients with chronic obstructive pulmonary disease (COPD).
The FTSE 100 pharmaceuticals giant said the approval was based on positive results from the phase 3 ‘ETHOS’ trial, in which the triple-combination therapy showed a statistically significant reduction in the rate of moderate or severe exacerbations, compared with dual-combination therapies.
It was also supported by efficacy and safety data from the phase 3 ‘KRONOS’ trial.