London pre-open: Stocks to gain as investors mull borrowing, retail sales data

(Sharecast News) - London stocks were set to rise at the open on Friday, recouping some of the previous day's losses as investors continued to mull developments in the Israel-Iran conflict, and following the release of UK borrowing and retail sales figures.

The FTSE 100 was called to open around 25 points higher.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The worsening global geopolitical weather keeps investors in a cautious mode, and will likely prevent them from taking too much risk before the weekend.

"While the news that the US is giving itself two weeks to decide whether to intervene in Iran - which is slightly better than earlier reports suggesting they would go in this weekend - has somehow eased tensions, looming uncertainties pushed US and European equities lower yesterday. I'm not sure the US buying itself time can be interpreted as a sign of de-escalation.

"European futures are slightly better bid in Asia, perhaps due to interest in European military and defence stocks, which particularly benefit the German DAX and the British FTSE."

On the macroeconomic front, figures from the Office for National Statistics showed the government borrowed more than expected in May.

Public sector net borrowing came in at �17.7bn. This was up �700m on May last year and �600m higher than the �17.1bn forecast by the Office for Budget Responsibility.

Separate figures from the ONS showed that retail sales fell 2.7% in May following a 1.3% increase in April, which was revised up from a 1.2% jump. Economists were expecting a much more modest 0.7% drop.

ONS senior statistician Hannah Finselbach said: "Retail sales fell sharply in May with their largest monthly fall since the end of 2023.

"This was mainly due to a dismal month for food retailers, especially supermarkets, following strong sales in April. Feedback suggested reduced purchases for alcohol and tobacco with customers choosing to make cutbacks.

"The falls were consistent across all sectors with clothing and household goods stores reporting slow trading due to reduced footfall. There was also decreased demand for DIY items as consumers took advantage of the good weather over the previous few months.

"Looking at the wider picture, retail sales are still up across the latest three-months as a whole."

In corporate news, housebuilder Berkeley posted a 5% fall in annual earnings but said it was confident about the future against a backdrop of falling interest rates and government plans to ramp up supply using brownfield sites. Full-year pre-tax profit came in at �529m, while new house sales rose to 4,047 from 3,521 in 2024.

The company also revealed that finance chief Richard Stern would become CEO, succeeding Rob Perrins, who will take on the role of executive chair as chairman Michael Dobson steps down in September after the group's annual general meeting.

Elsewhere, Japanese regulators accepted GSK's application to expand the use of its RSV vaccine, Arexvy, to the entire adult population.

Arexvy is now being considered for those aged 18 to 49 who are at increased risk of severe RSV disease, following positive Phase IIIb data showing immune response and safety in this population.

The drug is already approved for those aged 60 and older for the prevention of RSV disease, and for those 50 and older at increased risk for severe RSV disease.