London pre-open: Stocks to edge up as UK GDP beats expectations; US inflation eyed

(Sharecast News) - London stocks were set to edge up at the open on Friday as investors mulled a better-than-expected UK GDP reading ahead of a key US inflation print, with Brent crude holding above $105 a barrel.

The FTSE 100 was called to open around 10 points higher. At 0720 BST, Brent crude was down 1.6% at $105.86 a barrel and West Texas Intermediate was 1.5% lower at $100.98.

Figures released earlier by the Office for National Statistics showed the UK economy grew 0.4% in July, beating expectations for no growth. This followed 0.3% growth in June and no growth in May.

Services growth was 0.4%, while production and construction saw growth of 0.2% and of 0.1%, respectively.

ONS director of economic statistics Liz McKeown said: "Growth remained relatively robust in the latest three months, as ongoing strength in the services sector was only partially offset by falls in both production and construction.

"Within services, computer programming was the largest contributor, continuing the strong growth seen throughout the year, with evidence that businesses involved with AI and related technologies helped to boost this sector.

"Continuing recent trends, research and development and rental and leasing also helped drive growth, while wholesaling saw a notable fall.

"Looking at the latest month, services also drove growth in July, with computer programming again making the largest contribution. Separately, as in June, some businesses reported that the warm weather and FIFA World Cup had affected their activity, although effects differed across industries, benefitting some businesses while creating challenges for others."

Looking ahead to the rest of the day, all eyes will be on the US consumer price index for August due at 1330 BST.

Ipek Ozkardeskaya, senior analyst at Swissquote, said: "Today's inflation data from the US will be the last of a series of numbers pointing to heated price pressures in the US. There too, economic activity remains fairly robust and the jobs market is weakening but not collapsing - massive tech investments and expansive fiscal policies are doing the magic.

"Today's CPI data is expected to print headline inflation of around 3.4% y-o-y and core inflation near 2.4%. But that data is backward-looking. It doesn't take into account the latest - and quite sharp - rise in energy prices. Hence, if the Fed bypasses this month's meeting without announcing a rate hike, questions about the Fed's independence and the White House influence would return, with the risk of investors 'not buying' the decision and sending longer-term yields up, up and away."

In corporate news, housebuilder Berkeley said housing market activity has been further impacted by the ongoing conflict in the Middle East and political uncertainty in the UK, with buyers "more cautious to commit".

The firm said it was mindful that prospective purchasers may defer transactions until after the Autumn Budget statement at the end of October.

Online ticket platform Trainline held guidance and launched a new £100m share buyback after delivering flat sales and revenue for the half year.

Group net ticket sales came in at £3.3bn for the six months to 31 August and group underlying revenue was £233m, 1% lower year-on-year.