(Alliance News) - European equities pushed higher on Monday, shrugging off hawkish monetary policy developments, with deal-making and M&A prospects lifting shares in London and New York.
Friday's stronger-than-expected US jobs report strengthened the case for an interest rate hike by the Federal Reserve. There is also a growing conviction the European Central will do the same before the end of the year. The Bank of England, meanwhile, was only one vote away from a chunkier 50 basis point hike last week.
The FTSE 100 index ended up 57.07 points, or 0.8%, at 7,573.47. The mid-cap FTSE 250 index closed up 85.25 points, or 0.4%, at 21,797.29. The AIM All-Share index rose 0.37 of a point to 1,085.64.
The Cboe UK 100 index closed up 1.0% at 753.32. The Cboe 250 also ended up 0.3% at 19,500.64, and the Cboe Small Companies ended 0.2% higher at 15,349.98.
The CAC 40 stock index in Paris closed up 0.8% and the DAX 40 in Frankfurt rose 0.7%.
"There are plenty of reasons for investors to be cautious. Strong US jobs data last week might suggest the Fed pushes up rates faster and harder than currently expected. Ongoing tensions between Ukraine and Moscow also hang over markets like clouds waiting to unleash a fury of rain," AJ Bell analyst Russ Mould commented.
"The reaction to corporate earnings in the US has been somewhat volatile with extreme movements either up or down. Labour cost pressures remain a worry, and inflationary pressures are certainly darkening the outlook for both consumer and business spending."
However, markets have taken these potential headwinds in their stride at the start of the week.
Oanda analyst Craig Erlam commented: "Going into a new week, the dominant theme in the market is the same and will be for some time. The last couple of weeks has only elevated that as central banks have shifted into a higher gear and markets have continued to price in ever more tightening. What has been encouraging is that we haven't seen the same level of anxiety in the markets to the moves."
Erlam noted that the "falling knife scenario", where shares see rapid falls, may have passed.
"And with so much now priced in - of course, there's always room for more - we could see investors taking some comfort from the fact that the worst appears to be behind us. One thing that will help on that front is an easing of inflationary pressures, or at least some indication of that happening."
London's blue-chip FTSE 100 got a boost from the mining sector on Monday. Rio Tinto added 2.8%, while Anglo American rose 2.1%.
"Miners were in demand as an ongoing inflationary environment should be positive for metal prices," AJ Bell's Mould added.
Sky Bet owner Flutter Entertainment topped the large cap index, rising 4.8%.
Flutter has launched an "eleventh-hour" tilt to return the UK's National Lottery in British hands, the Telegraph reported over the weekend.
Flutter Chief Executive Peter Jackson has written to the head of the UK's Gambling Commission. The FTSE 100 company in December agreed to acquire online gaming firm Sisal, a contender to acquire the National Lottery.
Jackson's letter referred to the importance of a UK-listed firm owning the National Lottery. The National Lottery is currently operated by Camelot, owned by the Ontario Teachers' Pension Plan.
Vodafone rose 2.4%. The telecommunications firm is undertaking an overhaul codenamed "Project Galaxy", the Mail on Sunday reported.
The company is reorganising its Global Enterprise arm, which provides services to large firms. The Telegraph reported the move could open the door for Vodafone to sell its UK arm.
CMC Markets analyst Michael Hewson commented: "Vodafone shares have also edged higher on reports that it might be considering selling off its UK business, as part of a business reorganisation. While on the face of it this might make sense it's hard to see how this would address the weaknesses in other geographies like Italy and Spain, where margins are equally as squeezed."
In January, Bloomberg reported that activist investor Cevian Capital had taken a stake in Vodafone, and the two had discussed how to boost the performance of the telecom operator.
Elsewhere in London, the travel sector was on the up. British Airways owner International Consolidated Airlines Group added 3.9%, budget carrier easyJet rose 3.6%, while cargo firm John Menzies jumped 13%.
Data from investment bank UBS showed capacity rates in European airlines has improved sequentially in the first quarter, despite the presence of the Omicron variant.
Lamprell fell 14%. The oil field service provider flagged a reduction in full-year profit, as its operational productivity slowed and supply chain issues increased costs.
Preliminary figures showed revenue rose 15% to USD389 million in 2021 from USD260.4 million a year ago, but the company noted that profitability took a hit due to Covid-related costs.
The dollar was mixed on Monday. The pound was quoted at USD1.3534 at the London equities close, largely unchanged from USD1.3535 late Friday.
The euro was priced at USD1.1438, down from USD1.1443. Against the Japanese yen, the dollar was trading at JPY115.05, down against JPY115.25.
Equities in New York were higher at the time of the closing bell in London. The Dow Jones Industrial Average was up 0.2%, while the S&P 500 and Nasdaq Composite were both 0.1% higher.
Shares in at-home fitness equipment company Peloton Interactive were up 20% in New York, amid reports of takeover interest from Amazon and sports apparel firm Nike.
Big tech stocks took centre-stage in the US earnings calendar last week. This week sees reports from drugmaker and Covid vaccine developer Pfizer on Tuesday and entertainment company Walt Disney on Wednesday. Social media platform Twitter delivers fourth-quarter results on Thursday.
Tuesday's local corporate calendar has annual results from oil major BP and grocer Ocado. Energy company SSE and housebuilder Bellway post trading statements.
The economic calendar has the latest British Retail Consortium-KPMG UK retail sales monitor overnight.
Brent oil was quoted at USD92.98 a barrel on Monday at late Monday, down from USD93.35 late Friday. Gold stood at USD1,816.81 an ounce, higher against USD1,804.75.
By Eric Cunha; ericcunha@alliancenews.com
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