London pre-open: Stocks seen down as investors mull retail sales, borrowing data

(Sharecast News) - London stocks were set to fall at the open on Friday as investors continued to watch developments in Westminster after Liz Truss resigned as prime minister. The FTSE 100 was called to open 35 points lower at 6,908.

CMC Markets analyst Michael Hewson said: "While European markets managed to eke out a gain yesterday, the slow rise in bond yields continued to act as a drag on US markets which closed lower for the second day in succession, as the US 10-year yield hit another new multiyear high above 4.2%.

"This continued rise in yields has remained a drag on markets in Asia, as investors continue to worry about the prospects for growth and earnings against a backdrop of rising interest rates, and is expected to bleed into a lower European open later this morning."

On home shores, Penny Mordaunt, Rishi Sunak and Boris Johnson were all contenders to replace Truss, who on Thursday became the shortest-serving PM in UK history, resigning after just 45 days in office.

On the macro front, the latest data from the Office for National Statistics showed that government borrowing came in at £20bn in September, up £2.2bn from a year earlier and £3bn more than economists had expected. This was the highest borrowing figure for September since records began in 1993.

Meanwhile, separate data showed that retail sales fell 1.4% on the month in September following a 1.7% decline in August, and versus expectations for a 0.5% drop. The ONS said sales were weighed down by soaring prices, the cost-of-living crisis and the state funeral of Queen Elizabeth II.

In corporate news, components maker Essentra said it expected annual results to be in line with expectations after a 11% rise in third-quarter like-for-like sales.

The company said it had mitigated inflationary pressure through pricing, driving revenue growth and protecting profitability.