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(Alliance News) - Equities in London had a buoyant start to the week after a four-day break, with oil majors and miners leading the gainers amid optimism over easing Covid rules in China.
Meanwhile, sterling was holding strong despite UK Prime Minister Boris Johnson facing a vote of no confidence by Tory MPs amid anger across the party at the disclosures over lockdown parties in Downing Street.
Graham Brady, the chairman of the backbench 1922 Committee, confirmed in a statement that he has now received the 54 letters from Conservative MPs needed to trigger a vote.
The vote – by secret ballot – will take place at Westminster on Monday between 1800 BST and 2000 BST, with the count to take place immediately afterwards.
The pound was quoted at USD1.2528 at the London equities close, up compared to USD1.2490 at the close on Wednesday.
The FTSE 100 index closed up 75.27 points, or 1.0%, at 7,608.22 on Monday. The FTSE 250 ended up 233.90 points, or 1.2%, at 20,506.80, and the AIM All-Share closed up 7.00 points, or 0.7%, at 979.60.
The Cboe UK 100 ended up 1.2% at 758.63, the Cboe UK 250 closed up 1.3% at 18,205.33, and the Cboe Small Companies ended up 0.9% at 14,792.72.
"It looks like investors are having another go at extending the rally in equity markets on both sides of the Atlantic. Such renewed strength after what was ultimately an indecisive end to May will provide some comfort for investors, but with oil surging again the spectre of inflation and rate hikes is never far away," cautioned Chris Beauchamp, chief market analyst at IG.
Returning from a long weekend, London stocks cheered some solid US data and the easing of Covid curbs in China.
On Friday, data showed the US created more net new jobs in May than market expectations, with nonfarm payroll employment increasing by 390,000. The figure beat market expectations cited by FX Street of 325,000 net job additions.
The unemployment rate stayed unchanged from April at 3.6%, while the number of unemployed persons remained stable at 6.0 million.
Over in China, officials on Sunday said Beijing will gradually lift Covid-19 restrictions this week. After some easing in recent days, the Chinese capital – which reported 19 new infections Sunday – announced residents would start returning to work from Monday and schools would reopen from June 13.
China is wedded to a zero-Covid strategy of hard lockdowns, mass testing and long quarantine periods to wipe out clusters as they emerge.
That strategy has meant restrictions on movement in major cities including Shanghai and Beijing, a metropolis of 22 million people where a resurgence of Covid-19 in April led to just under 2,000 infections.
From Monday, restaurants will be able to welcome customers again – if they have tested negative in the previous three days – and public transport will operate normally, the city's government said in a statement.
"This optimism has played out in the form of outperformance in basic resources, while oil prices have also edged higher after Saudi Arabia raised prices to Asia markets, having announced it would be raising output by around 648k barrels a day from July, with BP and Shell helping to support the FTSE 100," said Michael Hewson, chief market analyst at CMC Markets.
Shares in BP rose 2.1% and Shell closed up 1.4%. Miners such as Rio Tinto, Glencore and Anglo American gained 3.4%, 3.54 and 3.0% respectively.
Brent oil was quoted at USD119.27 a barrel at the London equities close Monday, up from USD117.23 late Wednesday.
Elsewhere in the FTSE 100, shares in Melrose Industries rose 3.5% after agreeing a USD650 million deal to sell the final asset belonging to 2016 acquisition Nortek.
The industrial turnaround specialist said it has agreed to offload its Ergotron business to funds managed by Sterling Group.
Completion of the sale is expected to occur in the third quarter of 2022 and is conditional upon customary US antitrust approvals. On or before completion, Melrose will announce how it intends to use the net proceeds, the FTSE 100 listing added.
Ergoton is a manufacturer of ergonomic products such as computer mounts, stand-up desks, and mobile carts. Ergoton achieved an adjusted operating profit of GBP58 million in 2021.
At the bottom of the FTSE 100 was AstraZeneca, closing down 3.5%. This was despite the drugmaker saying its jointly developed breast cancer drug Enhertu showed improved overall survival in a phase III trial, while its leukaemia treatment Calquence showed a sustained survival benefit in another phase III trial.
Wizz Air and easyJet were bringing up the rear of the mid-caps, closing down 2.7% and 2.1% respectively amid UK travel chaos. Thousands of holidaymakers are stuck overseas after the cancellation of flights to the UK, with the aviation industry struggling to cope with a rise in demand for travel amid a severe staffing shortage.
Passengers booked with easyJet, British Airways, Tui Airways and Wizz Air are among those who have seen their plans to return from half-term or bank holiday breaks disrupted.
After cancelling dozens of flights over the weekend, easyJet scrapped a further 37 on Monday, with Gatwick the worst affected. British Airways axed more than 100 short-haul flights at Heathrow on Monday, although the airline stressed that passengers affected were given advance notice.
John Wood Group ended up 7.1%. Barclays raised the energy services firm to 'overweight' from 'equal weight'.
On AIM, mattress maker eve Sleep tumbled 24% after saying it is looking for a new owner to take the company private, as it warned that it will miss revenue targets for this year.
eve Sleep said it needs new funding to push it into the "wider sleep wellness space". It is looking for a new owner, or a major new investor, the board said.
In European equities on Monday, the CAC 40 in Paris ended up 1.0%, while the DAX 40 in Frankfurt ended up 1.3%.
The euro stood at USD1.0688 at the European equities close Monday, firming from USD1.0655 at the same time on Wednesday.
Stocks in New York were higher at the London equities close, with the DJIA up 0.3%, the S&P 500 index up 0.6%, and the Nasdaq Composite up 0.7%.
Safe haven assets were mixed amid Monday's risk-on mood. Against the Japanese yen, the dollar was trading at JPY131.61, higher compared to JPY129.95 late Wednesday.
However, precious metal gold benefited from a weaker dollar. Gold was quoted at USD1,844.10 an ounce at the London equities close Monday, firm against USD1,843.12 at the close on Wednesday.
Tuesday's economic calendar has German factory orders at 0700 BST, a UK services PMI at 0930 BST and Eurozone investor confidence at 0930 BST.
The corporate calendar on Tuesday has full-year results from NewRiver REIT, Gooch & Housego and LXi REIT.
By Lucy Heming; lucyheming@alliancenews.com
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