London pre-open: Stocks seen up as US debt ceiling talks set to continue

London stocks were set to rise at the open on Monday following a positive session in Asia, with all eyes on the US as debt ceiling talks are set to continue.

The FTSE 100 was called to open 25 points higher at 7,782.

CMC Markets analyst Michael Hewson said: "Up until late Friday afternoon markets had been steadily rising on an expectation that this week would see a deal come to a vote, and an expectation that a deal would be agreed.

"There is a sense that a lot of what is happening in DC is very much optics on the part of both Democrats and Republicans as both seek to throw red meat to their political base, however given the size of the stakes there is a feeling that we are only a heartbeat away from a political miscalculation and a default by mistake.

"An avoidance of a default is still the markets base line view even accounting for Friday’s late drop in US markets which took some of the gloss of a very positive week for global stock markets.

"As we look ahead to a new and another important week, and the resumption of debt ceiling talks later today, there is a sense that we are likely to see a few more twists and turns in this sorry saga, with neither side coming out of it particularly well."

On home shores, data out earlier showed that house prices hit a fresh high in May as market conditions steadied.

According to Rightmove’s latest house price index, average asking prices rose by 1.8% in May, the biggest so far this year and notably higher than May 2022, when they increased by 1%. It was also a notable improvement on April’s 0.2% increase.

As a result, the average asking price of a property coming to market now stands at £372,894.

Year-on-year, house prices were 1.5% higher.

Sellers were increasingly confident about asking prices, Rightmove noted, as the market continued to recover from the impact of last autumn’s disastrous mini budget. Buyer demand was also 3% higher than in May 2019, prior to the pandemic, while agreed sales were just 3% lower.

Tim Bannister, director of property science at Rightmove, said: "This month’s strong jump in new seller asking prices looks like a belated reaction and a sign of increasing confidence from sellers, as we’d usually see such a big monthly increase earlier in the spring season.

"One reason for this increased confidence may that the gloomy start-of-the-year predictions for the market are looking increasingly unlikely: more likely the market will continue to transition to a more normal activity level this year following the exceptional activity of the pandemic years.

"Steadying mortgage rates and a generally more positive outlook for the economy are also contributing to more seller confidence."

In corporate news, the UK government has cut its stake in NatWest Group to 38.6% via £1.26bn off-market buyback deal.

NatWest will buy 469,200,081 shares at 268.4 pence each, the closing price on May 19. The government previously held 41.4% in the bank.

Elsewhere, Kainos reported a jump in full-year profit and revenue amid "robust" underlying demand.

In the year to the end of March, adjusted pre-tax profit rose 15% to £67.6m, on revenue of £374.8m, up 24% on the previous year.

Kainos said the results reflect a "strong" underlying performance and increased investment in Workday Products, where product development and sales & marketing expenditure increased by £9.3m.