London pre-open: Stocks seen up as investors mull retail sales
London stocks were set to edge up at the open on Tuesday following a negative close in the previous session, as investors mulled the latest retail sales figures.
The FTSE 100 was called to open around eight points higher.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Today, the US will return from its long weekend and we could start seeing some action in the markets. It felt yesterday that the absence of the American markets revived the worries that we might see a rebound in US jobs figures this week - a scenario which would derail the Federal Reserve (Fed) doves, reshuffle the Fed cut expectations and give way to a potentially sizeable price action across different asset classes.
"Hiring and wage growth may have accelerated in August, for example, if that’s the case, the 50bp cut rates from the Fed will simply fall off the bus. And stronger-than-expected figures should, in the first place, let the US dollar recover a part of the recent losses, throw a floor under the US yields, disappoint indices and sectors that rely on rate cuts but give support to others - like the tech - who don’t really need the support of the Fed to do well.
"The jobs data will start flowing in from tomorrow, but investors will have a look at the final ISM figures today."
The ISM manufacturing PMI for August is due at 1500 BST. Before that, the S&P Global manufacturing PMI, also for August, is scheduled for release at 1445 BST.
On home shores, data released earlier showed that retail sales were higher than last year in August despite already strong comparatives in 2023, though growth was relatively subdued amid a "challenging" environment that's likely to last until the end of the year.
The British Retail Consortium-KPMG Retail Sales Monitor for August showed a 1% year-on-year increase in UK retail sales, against an increase of 4.1% in August 2023.
This was above the three-month average growth rate of 0.4%, but slightly below the 12-month average of +1.2%.
Food sales were 2.9% higher in the three months to August, making up for the 1.7% decline in non-food sales.
"Sales growth picked up in August, particularly for food as people came together to host barbecue and picnic gatherings for family and friends, and for summer clothing, health and beauty products as people prepared for trips away and summer social events," said the BRC's chief executive Helen Dickinson.
"While computing did well as university students made the most of summer discounting and readied themselves for the new academic year, other back to school related sales were weaker than normal as some families opted for second hand purchases.”
Dicksinson predicted that consumer spending may weaken in the coming months with energy bills set to rise in October, the same month the government's Autumn Budget is due, and called for "decisive action" to fix a "broken" business rates system which she said is holding back investment and limiting growth.
In corporate news, luxury timepiece seller Watches of Switzerland said it was on track to meet annual guidance after trading for the first 18 weeks of the financial year had been in line with expectations.
The company said demand for key luxury brands, particularly products on registration of interest lists, remained strong in both the UK and US markets, outstripping supply.
Ashtead Group reported a 7% increase in group rental revenue for the first quarter ended 31 July, although profits slightly declined compared to the prior year, with adjusted profit before tax at $573m.
The FTSE 100 company continued its expansion in North America, adding 33 locations and investing $855m, while maintaining a net debt-to-EBITDA leverage ratio of 1.7x.
It also announced chief financial officer Michael Pratt's retirement in September 2025, with former WestRock finance chief Alex Pease set to succeed him.
Elsewhere, packaging business DS Smith said overall trading for the current financial year was in line with management’s expectations.
In a brief AGM trading statement, it said "the market and business trends described in the outlook statement contained in our financial results for the year 30 April 2024 have continued".
In addition, DS Smith said the implementation of its combination with International Paper remains on track with the recent filing of the preliminary proxy statement by IP with the Securities and Exchange Commission.