London pre-open: Stocks seen down after downbeat US, Asian sessions

(Sharecast News) - London stocks were set to fall at the open on Monday following a downbeat Asian session and a negative close on Wall Street at the end of last week, as investors await fresh catalysts. The FTSE 100 was called to open 35 points lower at 7,608.

CMC Markets analyst Michael Hewson said: "With some US markets closed for the Juneteenth public holiday, today's European session is likely to be a quiet one, with a modestly negative open after US markets finished the end of a positive week, with their first daily decline in six days."

Investors will be digesting the latest survey from Rightmove, which showed that house prices edged lower in June, the first monthly drop so far this year.

According to the Rightmove house price index, the average new seller asking price dipped £82 to £372,812 in June. That compare to May's 1.8% increase.

Year-on-year, prices were 1.1% higher.

Rightmove said the small downward move - the first fall in June since 2017 - indicated that the usual summer slowdown had started earlier than usual, following a delayed bounce in activity in spring. Over the last decade, on average asking prices rose 0.6% in June.

The survey showed buyer demand had held steady during the month, up 6% on the same period in 2019, despite the recent hikes in mortgage rates.

But the number of agreed sales slipped, and in the last fortnight was 6% below the same period in 2019. In May, it was 3% lower.

Tim Bannister, director of property science at Rightmove, said: "Asking new seller prices, the first and leading indicator of new trends in the market, have dropped slightly this month.

"We expect prices to edge down during the second half of the year, which is the normal seasonal pattern, [and] current trends suggest our forecast for a 2% annual drop in asking prices at the end of 2023 is still valid."

The Bank of England has now raised the cost of borrowing 12 times in the last 18 months, to 4.5%, but analysts expect further rises, to at least 5.5%, by the end of the year.

Mortgage rates, which surged last autumn in response to the government's disastrous mini budget, had ease earlier in the year. But they are now moving steeply higher once again, primarily in response to stubbornly high inflation.

Bannister said: "It is likely to feel very frenetic for those taking out a mortgage right now, as they try to quickly lock in the best rate that they can find.

"Although the impact of higher mortgage rates on activity levels has been limited so far, with prospective buyers who can still afford to move appearing determined to go ahead, it remains to be seen how movers will respond to the expected further rate rises."

In corporate news, Coca-Cola HBC said it has agreed to buy Brown-Forman Finland, owner of the Finlandia vodka brand, for $220m.

The business is being bought from Brown-Forman Corporation's wholly-owned subsidiary, Brown-Forman Netherlands BV.

Coca-Cola HBC chief executive Zoran Bogdanovic said: "Having been associated with the distribution of Finlandia for 17 years in several markets, we are excited by this unique and regionally relevant opportunity that will support the acceleration of our on-premise business across more of our markets.

"The proven complementarity of our premium spirits business with our strong NARTD (Non-Alcoholic Ready-To-Drink) portfolio enables us to offer solutions for a broad range of 24/7 consumption occasions, particularly socialising moments."

Elsewhere, Spectris has agreed to buy Vermont-based MicroStrain for $37.6m (£29.4m).

MicroStrain is a developer of inertial and wireless sensing systems, serving the industrial and aerospace sensing systems market.

The business will be integrated into Spectris Dynamics, which has a long-established presence in high precision sensing solutions and where it will benefit from leveraging Spectris Dynamics' global sales and service network.

"The acquisition strengthens our overall sensor offering and helps further penetration into the rapidly growing automation and smart manufacturing markets, while also increasing our North American presence," Spectris said.