London pre-open: Stocks to edge higher ahead of UK, US GDP
London stocks were set to edge higher at the open on Friday as investors eye the release of first-quarter economic growth figures from the UK and the US.
The FTSE 100 was called to open up six points at 7,427.
CMC Markets analyst Michael Hewson said: "Today we’ll get to see early indications of how much of an impact the problems in retail and the construction sectors have had on the UK economy, with the latest Q1 GDP numbers. While they aren’t likely to be particularly strong, with an expectation of 0.3%, this hasn’t been anything new in recent years. Services is expected to contribute most of the gain, with construction likely to be a drag.
"Over the last two years Q1 has been the weakest quarter and has subsequently been followed by a pickup in Q2 and Q3, which suggests, despite the well documented problems in the retail sector, that we could see something similar unfold this year as well.
"It also doesn’t change the fact that the UK economy has grown every quarter since the first quarter of 2013, and yet in that time we’ve had both a rate cut and a rate hike, consequently rates have never been above where they are now since 2009."
The UK GDP data is due out at 0930 BST, while the US figures are at 1330 BST.
Before that, investors will be digesting the latest survey from mortgage lender Nationwide, which showed that house price growth picked up this month.
Annual house price growth rose to 2.6% from 2.1% in March, in line with expectations. On the month, house prices were up 0.2% in April versus a 0.2% drop the month before, as expected.
Nationwide’s chief economist Robert Gardner said: "February saw a softening in house purchase approvals to 64,000 cases, following a surprise rise in January. These figures are broadly in line with our expectations and close to the average for the last three months of 2017. Surveyors continue to report subdued levels of new buyer enquiries and recent months have also seen a softening in new instructions.
"Looking ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates. Subdued economic activity and the ongoing squeeze on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year. We continue to expect house prices to rise by around 1% over the course of 2018."
In corporate news, Royal Bank of Scotland Group reported a threefold increase in first quarter profits to £792m as the cost of restructuring and litigation fell while income rose.
Merlin Entertainments updated the market on its trading, reporting that group trading at the current “seasonally quiet” point of the year was in line with expectations, and consistent with the guidance provided on 1 March.
The company, which was holding its annual general meeting later in the day, said that visits in its London Midway division remained down year-on-year, reflecting the strong trading in the comparative period and continued impact from the 2017 terror attacks. It said it remained confident of a recovery over time.