London pre-open: Stocks seen down as investors mull retail sales, borrowing data

(Sharecast News) - London stocks looked set for more losses at the open on Friday as investors mulled a smaller-than-expected rise in retail sales but better-than-expected borrowing figures. The FTSE 100 was called to open down around 10 points.

Figures released earlier by the Office for National Statistics showed that retail sales ticked up 0.2% in November. This was an improvement on the 0.7% decline seen the month before, but was below analysts' expectations of a 0.5% jump.

The ONS said growth in supermarkets and other non-food stores was partly offset by a fall in clothing retailers.

Alex Kerr, UK economist at Capital Economics, said: "Overall, against a backdrop of recent weak activity data, today's release could have been worse. However, November's rise fails to fully reverse October's fall and sales volumes would need to rise by 1.1% m/m in December to prevent a contraction in Q4 overall.

"The risk of a contraction in overall GDP in Q4 remains (our forecast is 0.0% q/q). That said, as real incomes continue to grow and consumer confidence improves next year, we think the retail sector will contribute to an acceleration in consumer spending growth from around 0.7% in 2024 to 1.6% in 2025."

Separate figures released by the ONS showed that UK borrowing was £11.2bn in November, comfortably below the consensus forecast of £13bn, and £3.4bn lower than in November 2023. It was also the lowest November borrowing figure in three years.

Still to come, investors will eye the release of the US PCE data for November at 1330 GMT.

In corporate news, the UK government has cleared the £3.6bn sale of Royal Mail parent company International Distribution Services to Czech billionaire Daniel Kretinsky's EP Group.

EP Group said in a statement that it had met requirements under Britain's National Security and Investment Act to "provide services that are in support of UK national security".

IP Group that two of its life science portfolio companies, Intelligent Ultrasound Group and Abliva, had received cash offers, resulting in anticipated total cash proceeds of £13.8m.

The FTSE 250 company said the transactions represented significant uplifts from their last-reported net asset values, with Intelligent Ultrasound delivering a 100% uplift and Abliva a 284% uplift.

It said it planned to allocate about 20% of the proceeds to expand its share buyback programme, with updates pending completion of the transactions.

GSK announced positive results from a phase III trial of its ovarian cancer treatment, which met its primary endpoint of progression free survival.

Headline results from the FIRST-ENGOT-OV44 phase III trial evaluating a combination of Zejula (niraparib) and Jemperli (dostarlimab) showed statistically significant difference compared with standard chemotherapy. However, the secondary endpoint did not meet statistical significance.