London pre-open: Stocks seen down as Middle East tensions weigh

The FTSE 100 was called to open 22 points lower at 7,477.

CMC Markets analyst Michael Hewson said: "Sentiment continues to remain fragile and while the geopolitical noise from the Middle East wasn’t as apparent yesterday, it’s still very much there and remains a clear and present danger for nervous investors, as concerns rise over third party involvement.

"US markets at one point looked as if they might finish the day higher, however that wasn’t too last, as stocks retreated from the highs of the day and finished the session lower in the aftermath of comments from Fed chair Jay Powell, which served to push US bond yields even higher. These two factors have continued to weigh on markets overnight, with Asia markets falling sharply and as such we can expect to see another weaker European open.

"Anyone expecting to hear Fed chairman Jay Powell adopt a less hawkish tone given the recent rise in yields was in for a disappointment, when he indicated that despite recent moves in rates financial conditions probably still weren’t tight enough given the continued strength of the US economy."

On home shores, the latest figures from the Office for National Statistics showed that retail sales fell much more than expected in September.

Sales were down 0.9% on the month following a 0.4% increase in August, versus consensus expectations for a 0.2% decline. On the year, sales fell 1% in September following a 1.3% drop a month earlier.

ONS chief economist Grant Fitzner said: "Retail sales fell notably in September with retailers telling us that cost of living pressures are influencing consumers, particularly for sales of non-essential goods.

"It was a poor month for clothing stores as the warm autumnal conditions reduced sales of colder weather gear.

"However, September's unseasonable warmth did help drive up food sales a little, and fuel sales rebounded from last month's fall."

Elsewhere, a survey showed that consumer confidence fell sharply in October, as growing economic uncertainty weighed heavily.

The GfK UK consumer confidence index fell nine points to -30 in October, reversing two months of improving scores.

Within that, the steepest drop was seen in the major purchase index, which tumbled 14 points to -34.

Expectations for personal finances for the next 12 months fell by six points to -8, while expectations for the general economic situation slipped eight points to -32.

Joe Staton, client strategy director at GfK, said: "This sharp fall underlines that the cost of living crisis, and simply not having enough money to make ends meet, are still exerting acute pressure for many consumers.

"The fierce headwinds of meeting the accelerating costs of heating our homes, filling our petrol tanks, coping with surging mortgage and rental rates, a slowing jobs market and now the uncertainties posed by conflict in the Middle East, are all contributing to this growing unease.

"The volatility we are seeing in consumer confidence is a sure sign of a depressed economic mood and there’s no immediate prospect of any improvement."

In corporate news, international hotels group IHG reported a big slowdown in RevPAR - a key performance measure used in the hospitality industry - in the third quarter as growth softened across all regions, but said it still expects a "very strong financial performance" this year.

Group RevPAR was up 10.5% year-on-year in the third quarter, with Americas growing 4.1%, EMEAA increasing 15.9% and Greater China rising 43.2% In the first half, overall RevPAR growth came in at 24%, with Americas up 11%, EMEAA up 42% and Greater China up 94%.

Nevertheless, the company pointed out that RevPAR (or revenue per available room) in the Greater China region is now back above pre-Covid levels in 2019 - something that the Americas achieved in the second quarter of last year and Europe, Middle East, Africa & Asia in the fourth quarter.