(Alliance News) - Stocks in London were enjoying a broad-based rally on Monday morning, with optimism stemming from China easing its tight restrictions put in place to curb the spread of Covid in Beijing and Shanghai.
Richard Hunter, head of Markets at interactive investor, said: "The relief rally has taken to the global stage as investors mull the possibility of an economic return to form.
"Asian markets added to the positive momentum as China began to ease lockdown restrictions in both Beijing and Shanghai. The premier has announced that there will be a range of measures aimed at boosting a beleaguered economy, with more detail to follow shortly."
Hunter, however, believes the "damage" from the restrictions has already been done, pointing to "many economists predicting a contraction in the current quarter."
The FTSE 100 index was up 22.87 points, or 0.3%, at 7,608.33 early Monday. The mid-cap FTSE 250 index was up 227.02 points, or 1.1%, at 20,599.54. The AIM All-Share index was up 5.14 points at 973.39.
The Cboe UK 100 index was 0.2% at 757.51. The Cboe 250 was up 1.1% at 18,258.34 and the Cboe Small Companies was 0.4% higher at 14,708.46.
ii's Hunter added: "Early gains are broad based, tending to reflect those stocks which have been the subject of selling pressure given the economic outlook. Risks unquestionably remain and there are further challenges in plain sight, but for the moment investors are reacting positively to the latest developments."
In mainland Europe, the CAC 40 in Paris was up 0.6% and the DAX 40 in Frankfurt rose 0.7%.
In Tokyo on Monday, the Nikkei 225 closed up 2.2%. The Shanghai Composite ended up 0.6%, while the Hang Seng in Hong Kong was 2.0% higher in late trade. The S&P/ASX 200 closed up 1.5%.
Shoppers returned to the malls of Beijing on Sunday as the Chinese capital relaxed pandemic restrictions after declaring a small but persistent Covid-19 outbreak effectively under control.
China recorded 293 new cases on Saturday, of which 78 were among people who had arrived from overseas. Shanghai had the most non-imported cases, with 122 and Beijing 21 among a population of more than 20 million people in both cities.
A partial reopening of stores and offices in Beijing was welcomed by weary residents and struggling shopkeepers eager for life to return to normal.
Coupled with a gradual easing of restrictions in Shanghai, it signalled that the worst is over in the twin outbreaks in China's most prominent cities.
The lockdowns and other restrictions under China's 'zero-Covid' strategy have increasingly frustrated residents as they saw other countries ease curbs and reopen their borders.
In London, Countryside Partnerships soared 28% in the FTSE 250, after the housebuilder turned away a second approach in two months from San Francisco-based investor Inclusive Capital Partners.
In-Cap said the offer - at 295 pence per share - represents a "compelling proposition for Countryside shareholders". Countryside was trading at 306.00p in early trading, giving it a market cap of about GBP1.53 billion.
"The In-Cap team believes that Countryside shareholders deserve the opportunity to decide on the merits of any offer, and that if an approach is made in good faith, the Countryside board should act in the interests of its shareholders by engaging with the potential offeror and not deny its shareholders this opportunity," it said.
In-Cap currently owns about 45.8 million Countryside shares, a 9.2% stake.
In the large caps, Scottish Mortgage Investment Trust was the best performer, advancing 3.4%. The investment firm - which has stakes in the likes of Tesla and Amazon - was getting a boost from a strong session on Wall Street on Friday night. The Dow Jones Industrial Average closed up 1.8%, the S&P 500 up 2.5%, and the Nasdaq Composite up 3.3%.
Elsewhere in the Main Market, Foxtons was up 8.0% after selecting its new chief executive.
The London real estate agent has nabbed fellow estate agent Chestertons' CEO Guy Gittins to lead the firm.
Gittins, who has been running Chestertons since 2018, will take over Foxtons on September 5. Until then, Non-Executive Director Peter Rollings will be interim CEO.
Gittins is replacing Nic Budden, who has stepped down after running Foxtons since 2014.
Foxtons also noted it has made a good start to the financial year, with current trading remains in line with internal expectations.
In London's junior market, Oxford Metrics jumped 27%. The software company has agreed to sell its infrastructure asset management unit, Yotta, to Causeway Technologies for GBP52.0 million in cash.
"The sale not only delivers significant value for Oxford Metrics' shareholders in the near-term, but also brings increased clarity and focus to the group's stated five-year growth plan," the company said. "The proceeds from the sale will increase the Group's near-term financial firepower to accelerate M&A and planned organic investments. In line with the Group's strategy, these actions will aim to both broaden Vicon's product bench and extend the Group's sensing and analysis capabilities."
Oil prices were on the march on Monday morning. "There is one thing that preoccupies investors this Monday: rising oil prices," Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.
"The barrel of US crude trades above the USD117 mark as the US driving season is about to kick off, and UK oil giants review their production plans in the North Sea following the announcement of a 25% windfall tax in the UK. The windfall tax is fundamentally bad news: if oil companies reduce investment due to higher tax, the tighter global supply would keep oil prices upbeat. Thanks, Rishi," she continued. "On the geopolitical front, the Europeans meet and meet again to discuss about the sanctions about Russia, but they can't agree on a Russian energy ban as Hungary continues refusing to walk away from the Russian oil."
Ambassadors from the 27 EU member states on Sunday examined a compromise mooted to enable them to break the deadlock on a Russian oil embargo ahead of an emergency summit in Brussels.
The bloc's officials fear the absence of an agreement would cast a shadow over the two-day meeting starting Monday between European leaders.
The latest round of proposed sanctions by the EU has been blocked by landlocked Hungary, which has no access to seafaring oil cargo ships.
Brent oil quoted at USD119.70 a barrel early Monday, up from USD117.73 late Friday in London. Gold stood at USD1,860.40 an ounce, higher from USD1,852.40.
The dollar started the new week under pressure. The pound was quoted at USD1.2631 early Monday in London, up from USD1.2612 at the London equities close on Friday.
The euro stood at USD1.0757, higher from USD1.0705. Against the yen, the dollar was trading at JPY127.26, firm on JPY127.17.
Still to come on Monday is a German inflation reading at 1300 BST.
Monday is likely to see lower trading volumes in Europe, as US financial markets will be closed for Memorial Day.
By Paul McGowan; paulmcgowan@alliancenews.com
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