(Alliance News) - Stock prices in London opened higher on Monday, as risk sentiment across the globe improved following developments in the US labour market and in China.
The FTSE 100 index opened up 46.43 points, 0.6%, at 7,510.97. The FTSE 250 was up 62.09 points, 0.3%, at 18,598.99, and the AIM All-Share was 0.88 of a point, 0.1%, at 742.31.
The Cboe UK 100 was up 0.6% at 747.83, the Cboe UK 250 was up 0.4% at 16,262.59, and the Cboe Small Companies was flat at 13,461.61.
"The FTSE 100 is set for a positive trading session, with a dose of Monday motivation, as investors assess the slightly sunnier prospects for the world economy," said Susannah Streeter, head of money & markets at Hargreaves Lansdown.
"Hopes have lifted that the Fed’s efforts in taming unruly inflation in the US are working and not much more interest rate stick will be needed. There is also relief that Chinese efforts in stimulating demand might finally be paying off."
In European equities on Monday, the CAC 40 in Paris was up 0.6%, while the DAX 40 in Frankfurt was up 0.5%.
It is likely to be a quieter trading day, given that US markets will be closed for the Labor Day public holiday.
European markets were instead taking their cues from positive trading in Asia. In Japan, the Nikkei 225 index in Tokyo closed up 0.7%. In China, the Shanghai Composite added 1.4%, while the Hang Seng index in Hong Kong was up 2.5% in late dealings. Financial markets in Hong Kong had closed on Friday due to super typhoon Saola.
Investors in Asia were eyeing potential further stimulus measures from China for its property sector, following a series of measures announced last week, which included reducing mortgage down payments and tax incentives.
News that battered developer Country Garden had won approval from creditors to extend a deadline for a key bond repayment, narrowly avoiding a potential default, provided some much-needed relief from worries over the property sector. Shares in Country Garden were up 17% in Hong Kong late on Monday afternoon.
The S&P/ASX 200 in Sydney closed up 0.6%.
The positive trading in Asia helped to lift China-exposed stocks in the FTSE 100. Insurer Prudential was up 1.7%, while miners Rio Tinto, Glencore, Anglo American added 1.8%, 1.4% and 1.3% respectively.
Housebuilders were among the top performers in the index, with Persimmon up 1.9% and Taylor Wimpey up 1.2%.
In the FTSE 250, Wizz Air rose 2.2%.
The budget airline said its passenger numbers in August rose 24% year-on-year to 6.1 million, while load factor improved to 94% from 91%.
Wizz's Dublin-based counterpart, Ryanair, said passenger numbers rose 11% annually to 18.9 million in August, as load factor rose to 94% from 89%.
It also revealed around 63,000 of its passengers saw their flights cancelled during last week's air traffic control failure which caused widespread disruption across the industry and left thousands of passengers stranded overseas.
The Irish carrier said more than 350 of its flights were cancelled on August 28 and 29 due to the UK air traffic control issue.
On AIM, Ergomed surged 26% to 1,330 pence, after announcing it has agreed to a recommended cash takeover offer from a newly incorporated company controlled and indirectly owned by funds advised by UK private equity firm Permira Advisers.
The offer of 1,350p per share is a 28% premium to Friday's closing price of 1,052p, and values the pharmaceutical services company at GBP703.1 million.
Ergomed's directors deem the offer to be "fair and reasonable", having been advised by Jefferies and Numis. They unanimously recommend that shareholders vote in favour of the offer at forthcoming court and general meetings. If all conditions pass, Ergomed expects the takeover to become effective in the first quarter of 2024.
Gold was quoted at USD1,945.14 an ounce early Monday, higher than USD1,938.09 on Friday. Brent oil was trading at USD88.48 a barrel, rising further from USD88.00.
It's a quiet start to the week's economic calendar, with investors still digesting a mixed US jobs print from Friday. The US economy added 187,000 jobs in August, ahead of forecasts of 170,000, but July's payrolls figure was revised downwards to 157,000 from an original reading of 187,000.
The rate of unemployment rose unexpectedly in August to 3.8%, while growth in average hourly earnings surprised on the downside. Average hourly earnings rose 0.2% in August compared to July, below the 0.3% expected, although annual growth of 4.3% was in line with expectations.
"Overall, the release provides further optimism that the Federal Reserve is nearing the seemingly unattainable outcome of overcoming inflation without tipping the economy into recession. Recent economic data has for the most part gone in the Fed’s favour and its previous comments that its policy would be data dependent have led investors to conclude that a no-change decision at the upcoming interest rate meeting is virtually guaranteed," said interactive investor's Richard Hunter.
Sterling was quoted at USD1.2609 early Monday, rising slightly from USD1.2604 at the London equities close on Friday. The euro traded at USD1.0788, edging lower than USD1.0792. Against the yen, the dollar was quoted at JPY146.18, down a touch versus JPY146.21.
In the US on Friday, Wall Street ended flat to higher, with the Dow Jones Industrial Average up 0.3%, the S&P 500 up 0.2% and the Nasdaq Composite flat.
By Elizabeth Winter, Alliance News senior markets reporter
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