London pre-open: Stocks seen up as investors mull Nationwide data, French election news

(Sharecast News) - London stocks were set to rise at the open on Monday as investors mulled the latest French election results and looked ahead to the UK election this week. The FTSE 100 was called to open around 33 points higher.

Over the weekend, Marine Le Pen's National Rally got 33% of the votes in the first round of parliamentary elections. The leftwing New Popular Front alliance was second with 28% of the votes, while President Macron's centrist Together coalition got 20%.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The kneejerk reaction was a jump in the euro in the early week trading. The EURUSD jumped past 1.0750, the euro-pound flirted with the 0.85 level and the European futures trade in the positive as a 'buy the rumour sell the fact' reaction to the election outcome - and also on chatter that National Rally may not secure an absolute majority in the second round. But there is a non-neglectable chance for Marine Le Pen and Mr, Bardella to win the parliamentary majority next week and that risk will unlikely let the euro run too high before more clarity.

"Across the Channel, the week starts with increased election vibes as well, because Brits will be headed to their own general election this Thursday with little suspense on the horizon. A Labour win is seen as a net positive for financial markets, and would benefit to banks, homebuilders and groceries the most according to JP Morgan. A Labour should also benefit to the British pound in the long run on hope of improved relations with Europe post- Brexit.

"In the short run, however, a Labour win is broadly priced in. Therefore the return of the Bank of England (BoE) doves following the election could keep the pound's upside potential limited."

Investors were also digesting the latest data from Nationwide, which showed house price growth was broadly stable in June.

On the year, house prices rose 1.5% following 1.3% growth in May. On the month, meanwhile, prices were 0.2% higher in June, down from 0.4% growth a month earlier.

The average price of a home stood at £266,604, versus 264,249 in May.

Nationwide chief economist Robert Gardner said prices were around 3% below the all-time high recorded in the summer of 2022.

"Housing market activity has been broadly flat over the last year, with the total number of transactions down by around 15% compared with 2019 levels," he said. "Transactions involving a mortgage are down even more (nearly 25%), reflecting the impact of higher borrowing costs. By contrast, the volume of cash transactions is actually around 5% above pre-pandemic levels."

Gardner continued: "While earnings growth has been much stronger than house price growth in recent years, this hasn't been enough to offset the impact of higher mortgage rates, which are still well above the record lows prevailing in 2021 in the wake of the pandemic. For example, the interest rate on a five-year fixed rate mortgage for a borrower with a 25% deposit was 1.3% in late 2021, but in recent months this has been nearer to 4.7%.

"As a result, housing affordability is still stretched. Today, a borrower earning the average UK income buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 37% of take-home pay - well above the long run average of 30%."

In corporate news, Croda International said it had appointed Johnson Matthey chief financial officer Stephen Oxley to the same role at the chemicals company.

Oxley was previously a Partner at KPMG where he spent nearly 30 years advising global companies across consumer, healthcare and industrial sectors, Croda said in a statement. He is expected to join the firm no later than April 1, 2025 following a notice period.

Mining giant Anglo American said it had been forced to suspend production at its Grosvenor steelmaking coal mine in Queensland after an underground coal gas ignition incident at the weekend.

No injuries were reported and all workers were evacuated safely. Grosvenor is expected to contribute 3.5m tonnes of steelmaking coal to Anglo's 15-17m total in 2024 - though the company said it will update the market with guidance "once more information is available".