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(Alliance News) - Markets shook off concerns over Covid-19 second wave worries amid surging infections in the US to end Monday's session higher, with the FTSE 100 adding more than 65 points.
"After the increasing signs of worry last week about rising infection numbers in the US, the pessimistic mood appears to be morphing into one of grim resignation – investors now hope that renewed restrictions on activity might help to turn the tide once again," said Chris Beauchamp, chief market analyst at IG.
The FTSE 100 index closed up 66.47 points, or 1.1%, at 6,225.77. The FTSE 250 ended up 85.45 points, or 0.5%, at 17,198.66, but the AIM All-Share closed down 0.020 of a point at 883.12.
The Cboe UK 100 ended up 1.1% at 10,550.56, the Cboe UK 250 closed up 0.7% at 14711.48, but the Cboe Small Companies ended down 0.2% at 9,298.65.
In mainland Europe on Monday, the CAC 40 in Paris ended up 0.7%, while the DAX 30 in Frankfurt gained 1.2%.
European stocks enjoyed a good start to the week despite efforts to reopen the world's biggest economy being set back by a jump in new infections in big states such as Florida and California.
The hardest-hit parts of the US are in the south and west, where many state leaders had pushed for early economic reopenings. In Florida, Governor Ron DeSantis conceded there had been an "explosion" in new cases as the state notched a record 9,585 cases in 24 hours.
US deaths now exceed 125,000, about a quarter of the world total.
The EU has pushed back a decision on a list of "safe countries" from which travellers can visit Europe – a list which could exclude the US.
With US President Donald Trump struggling to get his re-election bid off the ground ahead of the November vote, the campaign confirmed that planned events featuring Vice President Mike Pence in Arizona and Florida next week had been postponed "out of an abundance of caution".
Wall Street was rallying on Monday. At the London equities close, the Dow Jones was up 1.7%, the S&P 500 index up 1.0% and the Nasdaq Composite up 0.7%.
Safe havens were mixed at the start of the week as equities gained. Against the yen, the dollar was trading at JPY107.71, higher compared to JPY107.21 late Friday, while gold was quoted at USD1,770.31 an ounce at the London equities close Monday against USD1,760.70 on Friday.
The pound was quoted at USD1.2271 at the London equities close Monday, lower compared to USD1.2326 at the close on Friday.
"Pessimism about the UK's trade talks with the EU appeared to put a bullet in the pound," commented Connor Campbell, financial analyst at Spreadex.
The EU and Britain launched Monday an intense five weeks of negotiations on a deal to define their post-Brexit relations, with London keen to wrap things up quickly.
The new round of talks in Brussels was the first held face-to-face since the coronavirus shutdown combined with the two sides' entrenched positions to stall progress.
Hopes are that the intensification of the discussions will make it possible to deliver results after previous sessions, of mainly videolink talks, achieved little. But tempers have flared in recent days and UK Prime Minister Boris Johnson insisted on Saturday that Britain was quite ready to accept the consequences of no deal if common ground cannot be found.
German Chancellor Angela Merkel – whose government takes over the presidency of the EU next week – has also sharpened her public stance, questioning whether London actually wants a deal.
"Of course it would be in the interest of Great Britain and all member states of the EU to achieve an orderly withdrawal," Merkel told the Sueddeutsche Zeitung daily.
"But that presupposes that both sides want this," she added.
Inflation in Germany rose more than expected in June as the country eased coronavirus lockdown restrictions, figures from Destatis showed.
Consumer prices were up 0.9% annually in June, faster than a 0.6% rise in May. On a monthly basis, prices rose 0.6% in June after a 0.1% fall the month before. Economists had been expecting a year-on-year rise of 0.6%, and a monthly increase of 0.4%.
Meanwhile, the German government has backed a European Central Bank bond-buying stimulus programme in a row with the country's top court which demanded a demonstration of the scheme's "proportionality", according to a letter seen by AFP.
"The finance ministry is convinced that the ECB council... has convincingly demonstrated its deliberations about proportionality," according to the letter from Finance Minister Olaf Scholz to parliament president Wolfgang Schaeuble.
The German government had received documents from the ECB justifying the programme, after the Federal Constitutional Court charged that governors failed to sufficiently account for their policy's side effects on the likes of banks and savers.
The euro stood at USD1.1243 at the European equities close Monday, higher against USD1.1210 at the same time on Friday.
In London, BP ended up 3.4% after the oil major said it has agreed to sell its petrochemicals business to privately owned UK chemicals company Ineos for USD5 billion as part of a plan to "reinvent BP".
Under the agreement, Ineos will pay BP a deposit of USD400 million and will pay a further USD3.6 billion on completion. An additional USD1 billion will be deferred and paid in three separate instalments of USD100 million in March, April and May 2021 with the remaining USD700 million payable by the end of June 2021.
The sale, which is slated to complete by the end of 2020, is expected to strengthen BP's balance sheet and delivers its USD15 billion divestment target a year early than originally scheduled, it noted. Proceeds from the sale will be used by BP for general corporate purposes.
Brent oil was quoted at USD41.24 a barrel at the London equities close Monday, up from USD40.70 late Friday.
Unilever shed 1.7% after UBS cut the consumer goods firm to Sell from Neutral.
Mid-cap Energean rose 22% as it entered into amended terms for its Edison E&P acquisition and said it will pay out USD466 million less than originally planned.
Edison is part of France's EDF Group.
The Mediterranean-focused gas producer said it has inked further amended terms for the deal, originally announced in July 2019, that now exclude Edison E&P's Norwegian subsidiary. This, along with the previous exclusion of Edison E&P's Algerian asset, means that the gross price tag has fallen to USD284 million from USD750 million.
The USD466 million reduction in sale price includes a USD155 million from the Algerian exclusion and USD200 million from the Norwegian exclusion. The remaining USD111 million is due to "additional reductions relating to the macro environment".
TUI jumped 7.5% after saying it is now ready for holidaymakers from all markets, with Cyprus, Portugal, Greece, the Balearic Islands, and Croatia to be the first holiday destinations to be on offer.
With the summer season underway, the package holiday company said all of its airlines and tour operators are prepared to restart with the first leisure flights having already occurred.
TUI noted the ongoing European Commission talks about re-opening travel to non-EU countries soon.
However, in a partial blow to these plans it has been reported Greece has extended its ban on flights from the UK until July 15. Flights will remain restricted even after Greece reopens its borders to international visitors on Wednesday, sources told the Athens News Agency.
Flights from Sweden are also included in the extended ban.
Restaurant Group gained 3.5% after lenders approved its company voluntary arrangement.
The restructuring will slash its leisure restaurant portfolio, which primarily consists of Frankie & Benny's sites. The move will heavily reduce the size of its leisure business to 160 sites, with rent reductions and revised lease terms on 85 of these sites.
Andy Hornby, chief executive of the group, said: "These are exceptionally challenging times for our sector and TRG is extremely grateful for the support shown by our creditors in today's vote."
In the UK corporate calendar for Tuesday, there is a trading statement from building materials supplier SIG and half-year results from holiday firm On the Beach.
In Tuesday's economic calendar, Japanese unemployment and industrial production are at 0030 and 0050 BST respectively, while UK GDP is at 0700 BST. Eurozone inflation is due at 1000 BST and US Federal Reserve Chair Jerome Powell testifies before Congress at 1730 BST.
By Lucy Heming; lucyheming@alliancenews.com
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