London pre-open: Stocks seen up on Wall St gains; house prices return to growth

London stocks were set to rise at the open on Friday following solid gains in the US and Asia, as investors mulled the latest UK house price and retail sales data.

The FTSE 100 was called to open around 50 points higher.

Figures released by Nationwide showed that annual house prices returned to growth in February for the first time in more than a year. House prices rose by 1.2% on the year following a 0.2% decline in January.

On the month, prices were up 0.7%, the same as in January, with the average price of a home standing at £260,420, versus £257,656.

Nationwide economist Robert Gardner said: "The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market. Indeed, industry data sources point to a noticeable increase in mortgage applications at the start of the year, while surveyors also reported a rise in new buyer enquiries.

"Nevertheless, near-term prospects remain highly uncertain, in part due to ongoing uncertainty about the future path of interest rates. After falling sharply in late December, swap rates, which underpin fixed rate mortgage pricing, have drifted back up.

"Borrowing costs remain well below the highs recorded last summer but, if the recent upward trend is sustained, it threatens to restrain the pace of any housing market recovery.

"While the squeeze on household budgets is easing, with wage growth now outstripping inflation by a healthy margin, it will take time to make up for the ground lost over the past few years, especially given consumer confidence remains fragile."

Separate data showed that retail footfall plunged last month as the unusually wet weather kept shoppers at home.

According the latest BRC-Sensormatic IQ Footfall Monitor, footfall slumped 6.2% in February, compared to a 2.8% decline a month earlier.

Within that, high streets recorded the biggest decline, with footfall down 9.3% from a more modest 2.3% fall in January.

But shopping centres and retail parks were also affected, with footfall off 7% and 5.8% respectively.

According to the Met Office, nearly a third more rain than usual fell in February, with some parts of the country experiencing record-breaking levels.

Helen Dickinson, chief executive of the British Retail Consortium, said: "Footfall experienced its biggest fall since the pandemic. One of the wettest Februarys on record, exacerbated by train strikes at the start of the month, meant shoppers visited fewer stores, with high streets one of the most significant declines.

"London, where footfall had been outperforming other major cities in the UK, saw one of the most significant declines."

Andy Sumpter, EMEA retail consultant for Sensormatic Solutions, said: "February saw a collision course of disruptive forces negatively impacting store traffic, meaning store visits dipped to their lowest ebb since the pandemic.

"Prior to any energy price cap reduction, and with squeezed spending budgets, the confirmation of the UK’s technical recession in 20223 appears to have weakened consumer confidence.

"Even Valentine’s Day - which usually provides a frisson of footfall - failed to woo shoppers into stores.

"Many [retailer will be] looking towards the prospect of an early Easter in March to bring about a change of fortunes."

In corporate news, specialist engineer IMI reported a 12% jump in 2023 profits and forecast higher earnings this year, driven by a strong order book.

Pre-tax profit for the year to December 31 came in at £387m compared with £346m a year ago. The company now expects adjusted earnings of 120p to 126p a share.

Engineering firm Smiths Group said it sold a third of its stake in US-listed IV therapy specialist ICU Medical for £70m.

Smiths, which sold the Smiths Medical division to ICU back in January 2022 for $2.7bn, received $500m-worth of ICU shares as part of the deal.

The company said it had offloaded 830,000 ICU shares, representing a 3.44% shareholding and 33% of its own stake to raise $88m for "general corporate purposes".

Babcock International said it has secured a £560m contract with the UK's Submarine Delivery Agency to conduct deep maintenance and extend the lifespan of HMS Victorious, a Vanguard Class nuclear submarine.

The FTSE 250 company said the multi-year programme was designed to modernise the submarine, ensuring its operational effectiveness well into the 2030s, with over 1,000 jobs sustained in the south-west and investments in the Babcock Skills Academy for critical nuclear skills.