London pre-open: Stocks seen lower as UK GDP revised down

London stocks were set to fall at the open on Friday as UK GDP data for the third quarter was revised down.

The FTSE 100 was called to open down around 15 points after figures from the Office for National Statistics showed the economy contracted by 0.1% in the period from July to September, down from a previous estimate of no growth.

The services sector shrank 0.2%, revised down from a first estimate of a 0.1% decline.

Darren Morgan, director of economic statistics at the ONS, said: "The latest data from both our regular monthly business survey and VAT returns show the economy performed slightly less well in the last two quarters than our initial estimates. The broader picture, though, remains one of an economy that has been little changed over the last year.

"The latest VAT data, which takes a little time to receive and process means we now estimate the economy showed no growth in the second quarter, with weaker performances from smaller businesses, particularly those in both hospitality and IT than first shown.

"We also now estimate the economy contracted slightly in the third quarter, when we previously reported no growth, with later returns from our business survey showing film production, engineering & design and telecommunications all performing a little worse than we initially thought."

Separate figures released by the ONS showed that retail sales volumes rose 1.3% in November, coming in ahead of consensus expectations for 0.4% growth and following no growth in October. The previous month’s data was revised up from a 0.3% fall.

Morgan said: "Retail sales grew strongly in November as heavy Black Friday discounting encouraged shoppers to spend. However, with the three-month trend continuing to fall and overall sales still below pre-pandemic levels, it’s still a challenging time for retailers.

"In the latest month, household goods retailers, clothing shops and department stores all reported robust sales, with computer stores, sports equipment, toy shops and cosmetics stores particularly benefitting from the impact of their Black Friday promotions.

"Supermarket sales ticked up a little, but it was specialist food and drink stores that had a really strong November due to customers stocking up early for Christmas and spending more than we have traditionally seen at this time of year."

In corporate news, the Canadian government has approved the $13.5bn takeover of HSBC Canada by RBC, allowing the sale to proceed despite calls for it to be blocked over fears of reduced competition in the sector.

Finance Minister Chrystia Freeland gave the deal the green light, the final stage in the process after Canada's Competition Bureau approved it in September.

The government's approval is conditional on none of HSBC Canada's 4,000 employees being fired within six months of the closing date, or two years for front-line staff, and that banking services continue to be provided at a minimum of 33 HSBC branches for four years.

HSBC said the deal is expected to close in the first quarter of 2024 and was committed to considering the payment of a special dividend of $0.21 per share as a priority use of the proceeds from this sale in the first half of 2024.

Elsewhere, the US Food and Drug Administration has approved the Wainua nerve disease treatment jointly developed by AstraZeneca and Ionis Pharmaceuticals.

The green light marks the first ever regulatory approval in the US for the treatment of adults with polyneuropathy of hereditary transthyretin-mediated amyloidosis. Additional regulatory reviews are already underway in Europe and other countries.