London pre-open: Stocks seen lower after May's GDP surprise

London stocks were set to open below the line on Wednesday, as investors digested an economic growth surprise in the UK, and looked towards this afternoon’s consumer inflation print out of the US.

The FTSE 100 was called to open 12 points lower at 7,198.

“European markets have spent most of this week treading water ahead of today’s US CPI report, which could act as a significant bellwether to how much more aggressive the Federal Reserve is likely to be when it comes to rate hikes if the Fed, as expected hikes by 75 basis points at the end of the month,” said CMC Markets chief market analyst Michael Hewson.

“US markets, on the other hand, have had an altogether softer tone, dropping into the close as worries over slowing growth, and tightening central banks prompted some late weakness.

“This weakness looks set to manifest itself in a weaker European open, even as Asia markets look set to eke out a positive session.”

Hewson said the decline in the value of sterling in recent months, particularly against the dollar, was mainly a direct consequence of a lack of confidence in how the UK economy was likely to perform in the coming months despite a decent first quarter.

“When combined with a lack of confidence in the reaction function of the Bank of England in dealing with a problem they helped create, is it any wonder the pound is under pressure.

“Sterling’s problems have been compounded by the decision by the UK government to announce a series of fiscal tightening measures in April, which have served to exacerbate the current squeeze on consumer incomes.”

The UK economy did, however, surprise to the upside in May, with the latest official data showing an expansion in GDP month-on-month.

According to the Office for National Statistics, GDP grew 0.5% month-on-month, more than reversing the 0.2% contraction in April.

In the corporate space, shipping services group Clarkson said it now expected to report unaudited underlying pre-tax profits of at least £42.0m for the six months ended 30 June.

Clarkson added that its first-half performance had been "strong" across all divisions, with its broking unit performing "particularly well".

Elsewhere, property developer Countryside Partnerships revealed chairman John Martin had decided to resign from all his roles at the company with immediate effect.

Countryside said senior independent director Douglas Hurt will take over as chairman, while Amanda Burton will replace Hurt, effective immediately.

The FTSE 250-listed firm also reiterated its full-year financial adjusted operating profit guidance for the twelve months ending 30 September.

Reporting by Josh White at Sharecast.com. Additional reporting by Iain Gilbert.