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(Alliance News) - Stocks in London ended higher on Tuesday amid an absence of tension between the US and China as state-owned Chinese firms bought at least three cargoes of US soybeans.
According to Reuters, purchases totalling at least 180,000 tonnes of the oilseed were for shipment in October or November, the peak US soy export season when American soybeans are usually the cheapest in the world, three US traders with knowledge of the deals said.
Investors had been fearful China would scale back on purchases of US soybeans, putting a trade agreement between the superpowers in jeopardy.
The FTSE 100 index closed up 53.72 points, or 0.9%, at 6,220.14. The FTSE 250 ended up 158.78 points, or 0.9%, at 17,436.31, and the AIM All-Share closed up 8.16 points, or 0.9%, at 891.15.
The Cboe UK 100 ended up 0.8% at 10,519.50, the Cboe UK 250 closed up 1.1% at 14,950.76, and the Cboe UK Small Companies ended up 1.1% at 9,484.97.
In Paris the CAC 40 ended up 2.0%, while the DAX 30 in Frankfurt ended up 3.8%. Markets in Germany reopened after being closed on Monday for a public holiday.
"Stock markets in Europe have posted decent gains for a second day in a row as a slight thawing of US-China trade relations, combined with hopes surrounding the easing of lockdown restrictions has boosted equity sentiment. It was reported last night that Chinese state-controlled companies placed orders to purchase agricultural goods from the US. The purchases send out a positive message that the two largest economies in the world are still trading, despite the rising tensions in relation to Hong Kong," said CMC Markets analyst David Madden.
The bullish momentum is also being helped by the fact that governments are taking measures to reopen their economies. In terms of economic activity, things are still way below where they were before the lockdowns, but the small bit of progress is welcomed by dealers
On the London Stock Exchange, aerospace aftermarket services providers ended among the blue-chip risers, with Meggitt up 9.3%, Melrose Industries up 7.9% and Rolls-Royce up 4.9%, amid optimism in the travel sector.
In addition, ahead of the FTSE Russell index review after the close on Wednesday, Meggitt looks to be one of the companies set for relegation into the FTSE 250, with a market cap of GBP2.42 billion.
Quarantine-free travel between the UK and some countries could be introduced at the end of this month if infection rates at home and abroad are sufficiently low. The UK government is understood to be considering so-called "air bridges" to enable people to travel without having to spend two weeks self-isolating on their return.
Budget airline easyJet and British Airways owner International Consolidated Airlines closed up 2.6% and 3.6% respectively.
The pound was quoted at USD1.2535 at the London equities close, up sharply from USD1.2470 at the close on Monday, as investors become more optimistic over an economic recovery in the UK as the coronavirus death toll starts to decline.
The number of weekly deaths involving coronavirus in England and Wales fell by almost a third in a week and reached its lowest level for seven weeks, official figures show. There were 2,589 deaths involving coronavirus in England and Wales registered in the week ending May 22, the Office for National Statistics said. This is down 32% from the previous seven days, with 3,810 deaths involving coronavirus registered in the week ending May 15.
The ONS said there were 12,288 deaths registered in England and Wales in the week ending May 22 - a drop of 2,285 from the previous week but still 2,348 more than the five-year average.
Analysts at OFX explained: "Hopes of an economic recovery has prompted a 'risk-on' attitude among investors causing the 'safe-haven' dollar status to dissipate. With most European countries, including the UK, passed the peak of the pandemic, attention is now shifting to signs of improvement. Therefore, we could expect further gains against the Dollar and a charge towards 1.26 is quite possible.
The euro stood at USD1.1210 at the European equities close, up from USD1.1125 late Monday.
Germany's governing coalition is debating a fresh economic stimulus package - possibly worth EUR80 billion - to soften the heavy blow dealt by the coronavirus pandemic.
It would come on top of a huge coronavirus budget passed in March, which included aid to prop up struggling companies as well as funding for a government-subsidised scheme to protect workers from being laid off.
Representatives of Chancellor Angela Merkel's government, made up of the conservative CDU and CSU parties and the centre-left SPD, were meeting at the chancellery on Tuesday for a marathon debate that sources said was likely to continue on Wednesday.
Against the yen, the dollar was trading at JPY108.55, up sharply from JPY107.60 late Monday.
Stocks in New York were mostly higher at the London equities close riding the wave of US Federal Reserve liquidity, overshadowing mass protests and looting in major US cities.
The Dow Jones Industrial Average was up 0.4%, the S&P 500 index up 0.1%, but the Nasdaq Composite was down 0.5%.
New York, Washington, DC and Los Angeles, California are among the cities rocked by civil unrest in the wake of George Floyd's death, at the hands of police.
City curfews have been enforced across the country as the US economy has only just begun to reopen in many places after a series of shutdowns due to the coronavirus has eliminated more than 40 million jobs.
Brent oil was quoted at USD39.20 a barrel at the London close, up sharply from USD37.60 at the close Monda, as OPEC leaders lay the groundwork for an extension of a potential production cut agreement.
OPEC and its allies are set to convene next week, but speculation is rife the meeting could be brought forward to this week.
Forex.com analyst Matthew Weller said: "According to the latest reports, OPEC+ is looking at moving its virtual meeting forward a few days to June 4, with Saudi Arabia and Gulf allies looking to maintain the current output reductions for another 1-3 months. Once again though, the crux of the matter comes down to Russia, which reportedly prefers to gradually increase production next month as initially agreed.
"For their part, oil traders appear to be siding with the Saudi perspective, driving prices up on their expectation of restricted future supply (not to mention the potential for a faster-than-anticipated recovery of global demand). Both the benchmark US (WTI) and UK (Brent) oil contracts are rallying into the upper USD30s to hit their highest levels since early March, when Covid-19 was just starting to impact the Western World."
Gold was quoted at USD1,738.21 an ounce at the London equities close, up from USD1,734.85 late Monday.
The economic events calendar on Wednesday has services PMI readings from Germany, the eurozone, UK and the US at 0855 BST, 0900 BST, 0930 BST and 1445 BST respectively.
The UK corporate calendar has annual results from car dealer Vertu Motors and interim results from food and beverage outlet operator SSP Group.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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