Yahoo Finance Wall Street and FTSE make gains as China eases COVID restrictions and tech stocks rally
The FTSE 100 and European stocks were off to a strong start this week as oil prices continued their rise and an easing of COVID restrictions in China boosted Asian markets.
The FTSE 100 (^FTSE) gained 1.4% to 7,637.91 as markets closed across Europe, while the CAC (^FCHI) advanced 1.5% in Paris. In Germany, the DAX (^GDAXI) gained 1.7%.
Across the pond, stocks regained some ground lost last week as investors bought into heavyweights Apple (APPL) and Amazon (AMZN). The S&P 500 (^GSPC) was 0.6% higher and the tech-heavy Nasdaq (^IXIC) gained 0.7%. The Dow Jones (^DJI) also climbed, rising 0.2% as trading continued in Wall Street.
The London benchmark opened higher after a two-day holiday last week to mark Queen Elizabeth II’s Platinum Jubilee with traders unmoved by confirmation of the no confidence vote for prime minister Boris Johnson.
Sterling (GBPUSD=X) edged higher even after confirmation that Johnson's future will be decided on Monday night. The pound rose 0.1% against the dollar to hit a session high at $1.2542.
FX strategist Viraj Patel said that the vote should be a "non-event" for sterling.
⚠️ Boris Johnson 'no confidence' vote should be a non-event for $GBP markets. Only way it becomes an issue is if the risks of an early general election pick up. This would put $GBP on a slippery slope to 1.20. But slim chance any Tory leader calls a snap election given polling pic.twitter.com/iLTPgCgwwR
— Viraj Patel (@VPatelFX) June 6, 2022
A vote of no confidence has happened because 54 of the 650 members of parliament have written letters to request a re-evaluation of who runs the country in the amid the "partygate" scandal.
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“UK prime minister Boris Johnson faces a vote of no confidence in his leadership as tensions escalate within the Conservative government. The threshold of 15% of Tory MPs has been surpassed with at least 54 out of 360 lawmakers writing to the chairman of the 1922 Committee, Graham Brady, triggering the vote which will take place at 6-8pm tonight,” Victoria Scholar, head of investment at Interactive Investor, said.
“Discontent about partygate, plans to send migrants to Rwanda as well as plans to rewrite the Northern Ireland protocol have diminished his popularity. Although Johnson may survive today’s vote, a no-confidence vote historically speaking tends to mark the start of the end of a prime minister’s time at the helm,” she added.
BP (BP.L) and Shell (SHEL.L) were the biggest drivers of gains, rising 2% and 1.8% respectively as Brent crude oil (BZ=F) jumped above $120 a barrel before correcting to $119.
Miners including Rio Tinto (RIO.L), Glencore (GLEN.L) and Anglo American (AAL.L) were all in green territory as an easing of lockdowns and further stimulus in China boosted commodities including copper.
Melrose (MRO.L) was among the biggest risers, up 3.5% after agreeing to sell its Ergotron unit to US-based Sterling Group for $650m (£519m).
Meanwhile, crude oil prices have rallied on reports that Saudi Arabia has increased prices to customers in Europe and Asia.
The Organization of the Petroleum Exporting Countries' (OPEC) plans for only a modest increase in monthly rates of output at its meeting in Vienna last Thursday also pushed prices higher.
Richard Hunter, head of markets at Interactive Investor, said: “Coupled with the potential of returning demand, supply in the oil market remains noticeably restricted, with the latest price hike from Saudi Arabia offsetting any relief from additional output increases from the OPEC+ members.
“The oil price is now ahead by 55% in the year to date, inevitably adding to concerns of more prolonged and persistent inflation.”
Asian markets were higher on Monday as Chinese and Hong Kong shares registered gains. The Shanghai Composite (000001.SS) finished 1.2% higher while the Hang Seng (^HSI) closed with gains of 1.5% as Chinese authorities continue to ease COVID restrictions across the country. Tokyo’s Nikkei 225 (^N225) advanced 0.5%.
Jeffery Halley at Oanda said: "Asia is having an altogether more orderly start to the week.
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"China announced a further easing of curbs in Beijing over the weekend, which is seeing some Asian equity markets and US futures trading in positive territory.
“Other glimmers of relief are that officials in Washington are considering a selective removal of tariffs on Chinese imports to aid the inflation fight.”
Hunter added: “A solid reading from the non-farm payroll figure in the US was a double-edged sword. On the one hand, the figure of 390,000 comfortably exceeded expectations, with the unemployment rate unchanged at 3.6%.
“This suggested that the US economy is continuing to make progress despite a backdrop of high inflation and uncertain consumer confidence with the jobs market remaining tight. In normal circumstances, this would allay recession fears which have weighed heavily on markets and could even prompt the view that the Fed was on track in engineering a soft landing for the economy.”
