London pre-open: Stocks to nudge up; retail sales fall more than expected

(Sharecast News) - London stocks were set to nudge ahead at the open on Friday despite a tech selloff on Wall Street, as investors mulled the latest UK retail sales data and consumer confidence reading.

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

Figures from the Office for National Statistics showed that retail sales fell 0.4% in September following a 0.7% rise the month before, and versus expectations for a smaller decline of 0.1%.

In the three months to September, sales were up 0.7% compared with the three months to June.

ONS senior statistician Hannah Finselbach said: "Retail sales grew in the latest quarter with growth led by motor fuel which, despite recent price increases at the pump, have now returned to monthly sales levels last seen before the start of the conflict in the Middle East.

"Food and drink sales also contributed to growth in the quarter, partly helped by the warm weather and the World Cup, although they fell back slightly in September."

Also on Friday, a survey from GfK showed that consumer confidence plunged in October to the greatest extent since the onset of the Covid pandemic.

GfK's long-running consumer confidence index fell 11 points from September to -24, with all five confidence measures down.

Excluding a 25-point slide at the onset of Covid, this marked the steepest fall since the Brexit vote in 2016.

The index for personal finances over the last 12 months declined to -10 in October from -3 the month before, while the gauge tracking expectations for personal finances over the next year fell to -3 this month from 5 in September.

The measure for the general economic situation over the last 12 months was 12 points lower at -48, while the index for the general situation over the next year deteriorated to -36 in October from -22 in September.

The major purchase index came in at -22 this month, down from -8 in September.

The savings index, which is not included in the overall index score, ticked one point higher to 28.

Neil Bellamy, consumer insights director at GfK, an NIQ company, said there had been "an extraordinary collapse" in consumer confidence.

"The last time we saw an 11-point drop was in July 2016, following the Brexit vote. In recent years, only the onset of the Covid pandemic saw a larger fall (down 25 points)," he said. "While all measures are lower, the two largest decreases are in expectations for the wider UK economy in the coming year and the intention to make major purchases, both slumping by 14 points. With no single major economic event driving the decline, and with weakness seen across the full spectrum of income, age and gender demographic groups, these are damaging findings given the UK government's priority of economic growth.

"Relentless cost-of-living pressures, against an international backdrop of unresolved regional conflicts that are themselves contributing to domestic inflation now at 3.5%, appear to have swept aside the nascent optimism we saw following the appointment of a new UK prime minister this summer. Headline consumer confidence is now back to the level seen in April, May and June of this year and the summer's buoyant mood has evaporated. The speed of this deterioration is alarming."

In corporate news, Rio Tinto said it will invest $1.9bn in the Kangwinan bauxite project in Queensland, Australia, adding 20m tonnes of annual production capacity as it looks to maintain its position as a leading global bauxite producer. First output is targeted for 2029, with full production expected by 2032.

The project will replace output from the Andoom mine and help offset the planned closure of the Gove operation, increasing annual capacity at Weipa Operations to around 44m tonnes.

The investment is expected to support more than 1,300 construction jobs and sustain long-term operations in the region.

Student accommodation provider Unite Group said it has exchanged contracts to sell the academy school at its newly-completed Hawthorne House development in London for £40.7m, as part of its strategy to release value from non-purpose-built student accommodation assets.

The disposal, priced at a 4.9% yield and representing a 2% discount to the asset's June 2026 book value, was expected to complete shortly.