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London pre-open: Stocks seen higher ahead of mortgage approvals

By Michele Maatouk

Date: Tuesday 02 Jun 2020

LONDON (ShareCast) - (Sharecast News) - London stocks were set to rise at the open on Tuesday following positive sessions in the US and Asia, as investors eyed the latest figures on lending and mortgage approvals.
The FTSE 100 was called to open 20 points higher at 6,186.

Net lending and mortgage approvals figures are due at 0930 BST.

CMC Markets analyst Michael Hewson said: "Today's UK Mortgage approvals for April are expected to show that lending collapsed from the numbers seen in March, which came in 56.2k. With the UK economy effectively locked down and the housing market effectively shuttered, the only activity is likely to have been re-mortgages, and as such April approvals are expected to slip to 24k. Net consumer credit is also expected come in with another negative number, after March's -3.8bn, with another 4.5bn expected to have been repaid.

"No one in the type of situation we find ourselves in now will feel compelled to borrow money unless they have absolutely no other choice, and with the government furlough scheme currently in place it is unlikely that this will change that much, in the coming months."

The positive call came despite growing unrest in the US over the killing of George Floyd.

"If the violence on US streets continues for much longer US investors might have to cope with a lockdown of a different kind, imposed by the National Guard. This is something that President Trump hinted he might well do if the various states aren't able to contain the outbreaks of violence across US cities."

In UK corporate news, industrial products distributor Electrocomponents deferred its final dividend until it had a clearer view of the coronavirus pandemic's impact as sales fell 14% in the first eight weeks of the current year.

The company said it would look at paying an extra interim dividend. Full year pre-tax profits rose 2.3% to 199.6m.

Tesco is looking for a new chief financial officer after Alan Stewart decided to retire from the supermarket group.

Stewart will leave the FTSE 100 company on 30 April when he will have been in the job for more than six years. His decision means Tesco's top two executive jobs will change hands with Ken Murphy due to arrive in October to replace Chief Executive Dave Lewis.