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(Alliance News) - London stocks brushed off coronavirus worries to surge ahead at the start of the week, with the HSBC leading the blue-chip FTSE 100 to an 85 point gain on Monday.
"The spark has been lit under the stock market today, as Friday's rebound extends into a new week and sees further momentum develop. Worries about virus counts and new movement restrictions have been cast aside, as investor money pours back into equities," said Chris Beauchamp, chief market analyst at IG.
The FTSE 100 index closed up 85.26 points, or 1.5%, at 5,927.93. The FTSE 250 ended up 326.15 points, or 1.9%, at 17,370.27, and the AIM All-Share closed up 1.18 points, or 0.1%, at 955.51.
The Cboe UK 100 ended up 2.0% at 591.52, the Cboe UK 250 closed up 2.3% at 14,744.35, and the Cboe Small Companies ended up 1.5% at 9,151.24.
In European equities on Monday, the CAC 40 in Paris ended up 2.4%, while the DAX 30 in Frankfurt ended up 3.2%.
More than one million people have died from coronavirus, according to an AFP toll, marking a grim milestone in the spread of the disease that has ravaged the world economy.
Europe, hit hard by the first wave, is now facing another surge, with Paris, London and Madrid all forced to introduce controls to slow infections threatening to overload hospitals. In Germany, Chancellor Angela Merkel's spokesman urged citizens to keep to strict hygiene measures.
Now, by law, people in England must self-isolate if they test positive for coronavirus, or are contacted by the test and trace service, or face fines starting from GBP1,000, rising to GBP10,000 for repeat offenders.
Meanwhile it emerged that separate laws, which also came into force on Monday, ban pubs, bars, restaurants and cafes from playing music which exceeds 85 decibels, although live performances are exempt.
The pound was quoted at USD1.2855 at the London equities close Monday, shooting up from USD1.2700 at the close on Friday.
"The British pound is ignoring the Covid restrictions and focusing on limited Brexit optimism, that is accompanied with a broader risk-on trading day that is sinking the dollar across the board," commented Oanda's Edward Moya.
On Tuesday, the ninth round of negotiations on a future relationship between the two sides will continue in Brussels as time ticks down to December 31, the end of the transition period in which the UK remains in the single market and follows EU rules.
Irish Taoiseach Micheal Martin said he is "not optimistic" that a trade deal will be struck.
At talks in Brussels on Monday, European Commission vice president Maros Sefcovic reiterated calls for ministers to scrap provisions in the UK Internal Market Bill giving them the power to override key provisions in the Withdrawal Agreement.
At a news conference following the meeting of the joint committee on the implementation of the agreement, Sefcovic said the EU "will not be shy" in taking legal action if the UK fails to comply by the deadline of the end of the month on Wednesday.
However Cabinet Office Minister Michael Gove, who co-chairs the committee with Sefcovic, said the the government intended to continue with passage of the Bill through Parliament.
The euro stood at USD1.1653 at the European equities close Monday, up against USD1.1623 at the same time on Friday.
Against the yen, the dollar was trading at JPY105.58, lower compared to JPY105.65 late Friday.
With the dollar lower on Monday, gold rose to USD1,871.99 an ounce at the London equities close Monday from USD1,863.20 at the close on Friday.
Brent oil was lifted by Monday's risk-on mood, quoted at USD42.10 a barrel at the London equities close Monday, up from USD41.76 late Friday.
Stocks in New York were rallying at the London equities close, with the DJIA up 1.8%, the S&P 500 index up 1.6%, and the Nasdaq Composite up 1.4%.
Leading the gains for London's FTSE 100 was HSBC Holdings, jumping 8.9% after its largest shareholder, Ping An Insurance Group, lifted its stake in the Asia-focused bank last week.
According to a regulatory filing, Ping An on Friday bought 10.8 million shares at an average price of HKD28.29 per share. Following the transaction, Ping An holds an 8% stake in HSBC, consolidating its position as the bank's biggest investor. The stock closed up 9.2% at HKD30.80 in Hong Kong.
Michael Hewson at CMC Markets commented: "This has helped the rest of the sector enjoy a decent rebound, with Standard Chartered also sharply higher."
StanChart shares gained 7.5% as the FTSE 350 banking sector rallied 8.4%.
Outside of banks, Diageo shares rose 6.1% after the Smirnoff vodka maker said it has made a good start of its financial year following the gradual re-opening of bars and hotels in most markets.
The FTSE 100-listed company continues to expect an improvement in organic net sales and operating profit for first half ending December 31 versus the second half of financial 2020, which ended on June 30. However, compared to the first half of financial 2020 - the six months from July to December 2019 - it still expects lower organic net sales and margin dilution.
Diageo said its US business is performing strongly and ahead of expectations in the first half, reflecting resilient consumer demand. In Europe, off-trade demand - meaning retail outlets - remains robust and the on-trade channel - meaning bars and restaurants - has largely re-opened with the easing of lockdown measures in most countries, Diageo said. However, it noted the risk of additional restrictions remains where infection rates are worsening.
At the bottom of the FTSE 100 was Rolls-Royce, slipping 3.6%. The jet engine maker late Friday noted continued media speculation regarding the possibility of undertaking a fundraising, but said that no final decision had been taken.
Sky News reported on Friday afternoon that the Kuwait Investment Office was in talks with the Trent 1000 engine maker about its potential GBP2.5 billion fundraising. In addition, the Financial Times, citing three people with direct knowledge of the matter, had reported on Sunday that Rolls-Royce was in talks with sovereign wealth funds, including Singapore's GIC, to raise GBP2.5 billion in October.
Rolls-Royce last week said it was evaluating the "merits" of raising GBP2.5 billion via a share issue to "enhance balance sheet resilience and strength".
William Hill sank 12% in the FTSE 250 - coming off a 43% surge on Friday - after US joint-venture partner Caesars Entertainment confirmed that it has made a possible GBP2.9 billion offer for the bookmaker.
The US hotel and casino operator confirmed a 272 pence per share offer, which it noted is a 58% premium to William Hill's closing price of 172.55p on September 1, the day before Caesars first made an approach to acquire the UK gambling firm.
Caesars, however, warned that it would terminate its US joint-venture with William Hill should Apollo Global Management end up acquiring the company. William Hill on Friday confirmed it had also received an approach from Apollo.
The UK corporate calendar on Tuesday has full-year results from plumbing and heating products supplier Ferguson and half-year results from greeting cards retailer Card Factory and roadside rescue firm AA. Baker Greggs puts out a trading statement.
In the economic calendar for Tuesday, there are UK mortgage approvals at 0930 BST and eurozone consumer confidence at 1000 BST. German inflation is due at 1300 BST and US consumer confidence at 1500 BST.
By Lucy Heming; lucyheming@alliancenews.com
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