It may be a fairly gentle gain for the FTSE 100, but it has neverthless pushed it to its highest point in a month.
Markets rallied at the end of last week, and have continued their momentum on Monday (albeit with the US trading desks likely to be absent later thanks to a holiday).
Some analysts ascribe the optimism on markets to the prospects of a Chinese economic recovery following a period of severe lockdowns that have disrupted the market that was previously the world’s growth engine.
Richard Hunter, head of markets at interactive investor, an investment platform, said:
Asian markets added to the positive momentum as China began to ease lockdown restrictions in both Beijing and Shanghai. The Premier has announced that there will be a range of measures aimed at boosting a beleaguered economy, with more detail to follow shortly.
However, the damage has largely been done over the last few months, with an inevitable drop in consumer sentiment tied to a soaring unemployment rate, and with many economists predicting a contraction in the current quarter. Even so, a perceived improvement to the fractious US/China relationship has also improved sentiment, particularly given the limitations which global economies have had to endure this year.
It is a fairly gentle start to the day for trading on the London Stock Exchange (and that might be expected to continue when there is a rare public holiday in the US, meaning Wall Street is closed). But there are some notable moves.
Among the mid caps on the FTSE 250 housebuilder Countryside is the clear stand-out: its shares have gained as much as 29% after San Francisco-based investor Inclusive Capital Partners (it likes to be known as In-Cap) made a £1.5bn takeover offer – the second approach within the last two months.
Countryside told In-Cap that it would not engage in negotiations, according to a stock market announcement on Monday – setting up the possibility of a higher bid.
In-Cap owned 9.2% of Countryside’s shares on Friday.
Introduction: EU’s Russian embargo plan pushes oil prices above $120 per barrel
Good morning, and welcome to our live coverage of business, economics, and financial markets.
Oil prices have hit a two-month high as traders anticipate a belated deal to limit Russian oil imports into the EU alongside other factors such as a recovery in demand in China as lockdown restrictions ease.
Brent crude futures prices rose above $120 per barrel on Monday morning for the first time since late March. The 50-cent gain for the day equated to a 0.4% increasein the North Sea benchmark, while its North American counterpart, West Texas Intermediate, also gained 0.7% to reach $115 per barrel.
The EU should be able to agree new sanctions, including on Russian oil, on Monday ahead of a summit of leaders from each country, according to its foreign policy chief, Josep Borrell.
Borrell told broadcaster France Info, according to Reuters:
We need to decide unanimously. There were tough talks yesterday afternoon, as well as this morning.
I think that this afternoon, we will be able to offer to the heads of the member states an agreement.
However, it remains to be seen whether the proposed ban will have teeth, with discord among European governments. Hungary in particular, led by Viktor Orbán who has long had a warm relationship with Russian President Vladimir Putin, has stood in the way of an embargo in recent weeks, partly because of the country’s dependence on Russian oil.
The EU is working on a compromise plan that ban Russian oil arriving in tankers but allow pipeline imports, meaning Hungary, Slovakia and the Czech Republic could continue to receive oil via the Soviet-era Druzhba pipeline that runs through Ukraine.
Asked if plans to include a ban to import Russian oil could fail over the resistance from Hungary and other eastern European states, Borrell said: “No, I don’t think so … there will be an agreement in the end.”
Europe’s stock markets have started the week on the front foot, with the Stoxx 600 index of European blue-chip companies gaining 0.7% in the opening trades. Germany’s Dax index was up 0.8% and France’s Cac 40 index gained 0.6%.
In the UK the FTSE 100 gained 0.4% and the mid-cap FTSE 250 rose by 0.9%.
US markets are closed today for the Memorial Day holiday.
The agenda
10am BST: Eurozone economic sentiment index (May; previous 105; consensus: 104.9)
1pm BST: Germany annual inflation rate (May; previous: 7.4%; consensus: 7.6%)
Read More: Oil prices hit two-month high as EU eyes Russian ban – business live