London pre-open: Stocks seen down after China data

(Sharecast News) - London stocks were set to fall at the open on Monday following disappointing Chinese data. The FTSE 100 was called to open around 35 points lower at 7,400.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The Chinese economy grew 6.3% in Q2 and that's faster than a 4.5% growth in Q1 but lower than the market estimate of 7.3%.

"Now don't be blindsided by the strong look of these numbers, because the latest figures were distorted by a low base effect last year when Shanghai and other big cities were in lockdown and life in China was running at a very low speed. If we look at a seasonally adjusted basis, the Chinese economy grew by only 0.8%, slowing sharply from a 2.2% rise in Q1.

"Market sentiment regarding the weakening growth numbers is mixed. In one hand, weak growth means that the government and the People's Bank of China (PBoC) will step up efforts to further ease the financial conditions and pave the way for a quicker recovery. On the other hand, supportive policies put in place so far have had little impact."

On home shores, a survey out earlier showed that house prices ticked lower in July as higher borrowing costs hit home.

According to the latest Rightmove house price index, house prices dipped 0.2% in July, compared to 0.0% growth in June.

The national average asking price is now £371,907, around 0.5% higher than July 2022 and the lowest annual growth since November 2019.

Rightmove said new sellers were tempering price expectations in response to rising mortgage costs and increasing buyer affordability constraints. The number of agreed sales is now 12% down on July 2019.

However, buyer demand remained resilient, Rightmove noted, up 3% on 2019. Surveyed agents said right-priced homes were still attracting buyers due to historical supply constraints.

Tim Bannister, director of property science at Rightmove, said: "The interest-rate brakes being applied more strongly to slow the economy are now beginning to bite in the housing market.

"While prices and sales bounced back this year much more strongly than most expected, the unexpectedly stubborn inflation figures and the surprise of further mortgage rate rises, when many felt they had stablished, have contributed to the fall in prices and number of sales agreed.

"However, buyer remains resilient."

The Bank of England has now increased the cost of borrowing 13 times since December 2021 as it struggles to bring down inflation. Interest rates currently stand at 5%, while inflation is 8.7%, well above its 2% target.

In corporate news, gambling firm Entain said it had bought Angstrom Sports for £81m plus contingent payments up to a maximum of £122m.

US-based Angstrom is a specialist provider of next generation sports modelling, forecasting and data analytics.

"We are delighted that Angstrom will be joining Entain, enabling us to accelerate the development of the Entain Platform. Their next generation forecasting, pricing and risk management capabilities will unlock significant opportunities across BetMGM's US sports betting offering, particularly in the fast-growing markets of parlay and in-play wagering," said Entain chief executive Jette Nygaard-Andersen.