London pre-open: Stocks to edge lower after Asian losses

(Sharecast News) - London stocks were set to edge lower at the open on Monday following a downbeat session in Asia. The FTSE 100 was called to open down around 15 points.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "London's blue-chip index is set for a subdued start to trading as investors assess falling confidence among UK businesses and oil prices come off recent highs. Sentiment towards European companies appear to be warming up a little following the Italian prime minister's surprise meeting with President Trump, although wariness remains about the tariff threat.

"The pessimism among many firms following the UK Budget has been underlined by the survey from the British Chambers of Commerce, which indicates that almost two-thirds are concerned about tax and the effect on their business in 2025. The looming increase in employers' National Insurance contributions is playing on minds, with companies bracing for potential price increases through the supply chain.

"The report will be an unwelcome read for the government which has already been hit with disappointing growth figures, which showed a stagnation for the economy in the three months to September, then a contraction in October. Nevertheless, the infrastructure investment boost included in the Budget should help provide a tailwind for activity, and the expected reduction in interest rates is likely to offer relief to companies and consumers.

"KPMG has joined the OECD in forecasting that growth with increase by 1.7% this year, double the rate for 2024. Thanks to the minimum wage, many lower earners will have more money in their pockets to spend, which should also help retailers focused on value offerings."

On the macro front, data showed that activity in China's services sector grew in December at the fastest rate in seven months amid a jump in domestic demand, although foreign orders fell.

The Caixin/S&P Global services purchasing managers' index ticked up to 52.2 from 51.5 in November. This was above the reading of 51.7 expected by economists and the fastest expansion since May 2024.

A reading above 50 indicates expansion, while a reading below signals contraction.

The new business sub-index printed at 52.7 in December, up from 51.8 in November.

Wang Zhe, senior economist at Caixin Insight Group, said: "Since late September, the synergy of existing policies and additional stimulus measures has continued to act on the market, producing more positive factors."

In corporate news, UK and US-listed oil group Diversified Energy announced the acquisition of several assets in America's Appalachian Basin, across Virginia, West Virginia and Alabama, which it says will complement existing operations and provide synergies to improve margins.

The company is spending $45m on the assets, which currently produce around 2m barrels of oil equivalents per day.

Avon Technologies announced that its subsidiary Team Wendy Ceradyne has secured an $18m delivery order from the Defense Logistics Agency under the US Army's Next Generation Integrated Head Protection System (NG IHPS) helmet contract.

The London-listed firm said the framework agreement, initially awarded in September 2021, was seeing continued demand for its advanced ballistic and brain injury mitigation technologies.