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(Alliance News) - Stocks in London look set to open the shortened week on the front foot, boosted by a positive session in Asia as China begins to ease its Covid restrictions in both Shanghai and Beijing.
Financial markets in London will be closed on Thursday and Friday this week for the Queen's Jubilee bank holiday, while New York is closed on Monday for the US Memorial Day holiday.
In early corporate news in London, Countryside Partnerships has rebuffed a takeover attempt. IMI has opened its chequebook. S4 Capital is trading ahead of its previous guidance.
IG futures indicate the FTSE 100 index will open up 62.84 points, or 0.8%, at 7,648.30 on Monday. The blue-chip index closed up 20.54 points, or 0.3%, at 7,585.46 on Friday - rising 2.7% last week.
"Asian markets are mostly positive this morning as Shanghai announced a raft of stimulus measures and both Shanghai and Beijing eased Covid-19 restrictions. The devil is in the detail of course, and workers in both cities still face challenges either going to work, or even being allowed to leave the house. Nor has the reality that the virus only has to get lucky once, prompting the reimposition of tightened Covid-zero restrictions, [received the attention it deserves] in the minds of investors," Jeffrey Halley, senior market analyst at Oanda, said.
"Such minutiae are usually ignored by markets when it doesn't suit the preferred narrative, and so it is today. Asia is pricing in peak virus in China and a recovery in growth."
In Tokyo on Monday, the Nikkei 225 closed up 2.2%. The Shanghai Composite was up 0.5%, while the Hang Seng in Hong Kong was 2.0% higher. The S&P/ASX 200 closed up 1.5%.
Shoppers returned to the malls of Beijing on Sunday as the Chinese capital relaxed pandemic restrictions after declaring a small but persistent Covid-19 outbreak effectively under control.
A partial reopening of stores and offices in Beijing was welcomed by weary residents and struggling shopkeepers eager for life to return to normal.
Coupled with a gradual easing of restrictions in Shanghai, it signalled that the worst is over in the twin outbreaks in China's most prominent cities.
The lockdowns and other restrictions under China's 'zero-Covid' strategy have increasingly frustrated residents as they saw other countries ease curbs and reopen their borders.
Stocks in New York ended higher on Friday after data showed a key measure of US inflation moderated, fuelling hopes that price increases could be slowing. The Dow Jones Industrial Average closed up 1.8%, the S&P 500 up 2.5%, and the Nasdaq Composite up 3.3%.
According to the Bureau of Economic Analysis, the core personal consumption expenditures price index rose 4.9% year-on-year in April, slowed from 5.2% in March and in line with consensus. The figure, which excludes food and energy prices, is the US Federal Reserve's preferred inflation gauge.
The wider PCE price index rose 6.3% annually in April, slowing from a 6.6% rise in March. The figure came in below FXStreet-cited market consensus, which had forecast the PCE price index to remain unchanged at 6.6%.
Monday is likely to see lower trading volumes in Europe, AvaTrade's Naeem Aslam noted, as US financial markets will be closed for Memorial Day.
In London, housebuilder Countryside Partnerships has turned away a second approach in two months from San Francisco-based investor Inclusive Capital Partners.
In-Cap said the offer - at 295 pence per share - represents a "compelling proposition for Countryside shareholders".
"The In-Cap team believes that Countryside shareholders deserve the opportunity to decide on the merits of any offer, and that if an approach is made in good faith, the Countryside board should act in the interests of its shareholders by engaging with the potential offeror and not deny its shareholders this opportunity," it said.
In-Cap currently owns about 45.8 million Countryside shares, a 9.2% stake.
Midcap engineering firm IMI agreed to buy Bahr Modultechnik for an enterprise value of EUR98 million.
Birmingham-based IMI said Luhden, Germany-based Bahr will become part of its Industrial Automation business within IMI Precision Engineering.
Bahr manufactures modular electric linear motion systems.
The acquisition is expected to take close by mid-June.
"The proposed acquisition of Bahr is aligned to IMI's strategy and its purpose of 'breakthrough engineering for a better world'. The addition of Bahr will enable IMI Precision to deliver a power agnostic offering of pneumatic and electric linear motion systems," IMI said.
Advertising firm S4 Capital said its revenue jumped in the first quarter and was ahead of its guidance to the market.
"Momentum has been reinforced by two further 'whopper' additions making a total of eight against the target of 20, one through pitch and one through a combination, both of which will be fully effective in 2023," S4 explained.
Revenue in the first quarter of 2022 was up 70% on the year before at GBP206.8 million and up 41% on a like-for-like and pro-forma basis. Gross profit rose 65% to GBP171.1 million and by 35% on a like-for-like and pro-forma basis.
The Martin Sorrell-founded firm added: "This represents an excellent start to achieving the company's 2022-24 three-year plan of doubling its size on a like-for-like basis and of also achieving the previous similarly targeted 2020-22 and 2021-23 three-year plans, which both also called for a doubling. The company achieved its first three-year plan for 2019-21."
For 2022, S4 maintained its like-for-like gross profit growth guidance of 25%.
Oil prices were on the march on Monday morning as traders "keep an eye on the possibility" of an embargo on Russian oil, Aslam said.
He continued: "The EU has failed to reach an agreement to put an embargo on Russia, but speculators believe that they could hear more development on this matter today."
Ambassadors from the 27 EU member states on Sunday examined a compromise mooted to enable them to break the deadlock on a Russian oil embargo ahead of an emergency summit in Brussels.
The bloc's officials fear the absence of an agreement would cast a shadow over the two-day meeting starting Monday between European leaders.
The latest round of proposed sanctions by the EU has been blocked by landlocked Hungary, which has no access to seafaring oil cargo ships.
Oanda's Halley added: "The underlying driver though is the massive squeeze on refined products we are seeing around the world, which is lifting the base ingredient for all that diesel and petrol that has got very expensive. The world would have been flapping and wringing its hands about the end of days if we had said Brent crude above USD120.00 a barrel a month or two or three or four ago, now it is being ignored. By the way, if China recovers, oil prices will as well; just saying."
Brent oil quoted at USD120.03 a barrel early Monday, up from USD117.73 late Friday in London. Gold stood at USD1,862.50 an ounce, higher from USD1,852.40.
The dollar started the new week under pressure. The pound was quoted at USD1.2647 early Monday in London, up from USD1.2612 at the London equities close on Friday.
The euro stood at USD1.0767, higher from USD1.0705. Against the yen, the dollar was trading at JPY127.08, soft on JPY127.17.
The economic events calendar on Monday has a German inflation reading at 1300 BST.
By Paul McGowan; paulmcgowan@alliancenews.com
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