London pre-open: Stocks seen lower after China data
London stocks were set to fall at the open on Monday as investors mull disappointing Chinese data.
The FTSE 100 was called to open 40 points lower at 7,178.
CMC Markets analyst Michael Hewson said: "Any doubts about the strength of the US recovery, and particularly the US consumer, will only exacerbate concerns about the resilience of the global recovery as a whole, given concerns about a slowdown in the Chinese economy which this morning showed further signs of increased fragility.
"Recent China trade data appeared to suggest that internal demand within the world’s second largest economy is already on the wane, and today’s retail sales and industrial production numbers would appear to confirm some of that anxiety. The trade numbers for July showed that the Chinese economy got off to a weak start to Q3, as exports fell to their lowest levels this year.
"Imports were weaker in July, while the recent floods across China may well have impacted demand, along with rising Delta variant infections. The rise in delta infection rates has already prompted Chinese authorities to reimpose rolling lockdowns across the country, an act which is likely to reduce aggregate demand further.
"All of these factors appear to have been confirmed with this morning’s July retail sales which slid sharply, coming in at 8.5%, down from 12.1% in June, and much lower than estimates of 11.5%. Industrial production also slowed sharply to 6.4%, down from 8.3%. This slowdown is unlikely to be a one-off given that China appears to be adopting a zero-Covid policy, a policy that given the highly infectious nature of the delta variant will probably be difficult to achieve."
Hewson that weakness in the latest economic data from China amid concerns over the recovery appears to have acted as a drag on sentiment in Asia, and this looks set to translate into a sharply lower European open.
In corporate news, defence group Cobham said its £2.57bn offer for UK-based rival Ultra Electronics had been agreed.
Cobham is offering £35 a share and "legally binding and enforceable commitments" to the UK government on national security matters.
Elsewhere, BHP confirmed it has initiated a strategic review of its petroleum business "to re-assess its position and long-term strategic fit" in the portfolio.
Responding to recent press speculation the company noted that it regularly reviews its portfolio of assets to seek opportunities to maximise long-term shareholder value.
BHP said a number of options are being evaluated, including a potential merger of the petroleum business with Woodside Petroleum and a distribution of Woodside shares to BHP shareholders.
"We confirm that we have been in discussions with Woodside. While discussions between the parties are currently progressing, no agreement has been reached on any such transaction," it said.