London pre-open: Stocks seen muted as US markets closed for Labor Day

1st Sep 2025 07:34

(Sharecast News) - London stocks were set for a muted open on Monday, with a relatively quiet session expected as US markets will be closed for Labor Day.

The FTSE 100 was called to open unchanged at 9,187.

Investors will be mulling the latest data from Nationwide, which showed that annual house price growth slowed in August.

House prices grew 2.1% on the year last month, down from 2.4% growth in July.

On the month, prices dipped 0.1% in August following 0.5% growth the month before.

The average price of a home stood at £271,079 last month, down from £272,664 in July.

Nationwide chief economist Robert Gardner said: "The relatively subdued pace of house price growth is perhaps understandable, given that affordability remains stretched relative to long-term norms. House prices are still high compared to household incomes, making raising a deposit challenging for prospective buyers, especially given the intense cost of living pressures in recent years.

"Combined with the fact that mortgage costs are more than three times the levels prevailing in the wake of the pandemic, this means that the cost of servicing a mortgage is also a barrier for many. Indeed, an average earner buying the typical first-time buyer property with a 20% deposit faces a monthly mortgage payment equivalent to around 35% of their take-home pay, well above the long run average of 30%.

"However, affordability should continue to improve gradually if income growth continues to outpace house price growth as we expect. Borrowing costs are likely to moderate a little further if Bank Rate is lowered again in the coming quarters. This should support buyer demand, especially since household balance sheets are strong and labour market conditions are expected to remain solid."

Elsewhere, a survey from the Confederation of British Industry showed that private sector firms across all major sectors in the UK expect economic activity to weaken in the coming quarter.

Growth Indicator's gauge measuring predicted output volumes over the coming three months registered a net balance of -15% in August, up from -18% in July but well behind the +9% level seen in August 2024.

The monthly composite index - a weighted percentage of companies reporting an increase minus those reporting a decrease - has been in negative territory since October last year.

The indicator tracking future business volumes was -15% for the services sector, -19% for the distribution sales sector and -13% in manufacturing.

"The outlook remains subdued across the private sector, as businesses continue to grapple with sluggish demand, higher employment costs, increasing uncertainty, and squeezed margins. However, expectations for activity are less negative than in the first half of the year, which is a thin silver lining," said Alpesh Paleja, the CBI's deputy chief economist.

In May, amid the launch of Donald Trump's trade war and ensuing bout of geopolitical uncertainty, the forward-looking monthly composite dropped to -30%.

However, despite the slight easing of negativity over recent months, there's "little evidence yet of a meaningful turnaround", Paleja said.

"Firms are increasingly focusing on building resilience and efficiency as they navigate a challenging economic environment - at the expense of capital spending and longer-term growth ambitions."

In corporate news, quality assurance provider Intertek said it has bought Australian environmental testing and analysis provider Envirolab for an undisclosed sum, exposing it to the "fast growth and attractive" Asia-Pacific environmental testing market.

Intertek said Envirolab, which has over 200 staff across five laboratories in Australia and New Zealand, generated revenues of £28m in the financial year ended June 2025.

Domino's Pizza announced a £20m share buyback as it takes advantage of a big plunge in its share price over recent weeks.

The UK-based master franchise of the American fast-food chain, which had hinted at the resumption of share buybacks at its half-year results in early August, said that full-year expectations remain unchanged, though net debt is now expected to be higher than previously expected.