Global stocks, rising oil prices

Global stock markets and oil prices rose on Monday, helped by an easing of Covid lockdowns in the world’s second-largest economy, China.

The London Stock Exchange, reopened after a UK bank holiday to mark Queen Elizabeth II’s Platinum Jubilee, shrugged off news that embattled British Prime Minister Boris Johnson was due to face a confidence vote from MPs of his own on Monday. Conservative party.

Elsewhere, eurozone stocks soared ahead of a European Central Bank meeting on Thursday, when the ECB prepares to draw a line under its massive bond-buying stimulus program.

Across the Atlantic, Wall Street also opened higher.

Stocks “started the week on a positive note, supported by a strong US jobs report on Friday,” said Victoria Scholar, chief investment officer at Interactive Investor.

Traders also rejoiced at the end of China’s Covid containment measures that crippled its economy for months.

As infections trend down in major cities including Shanghai and Beijing, authorities have let some sense of normalcy return, raising hopes for consumer activity to pick up.

“Positive news about Chinese economic activity and cheaper stock valuations could offer value from a long-term investment perspective, but volatility will remain elevated in the near term,” said Diana Mousina, AMP Capital.

Oil prices extended recent gains as the commitment of OPEC and other major producers to increase production fell short of what markets were hoping for.

“Despite increased production from OPEC+, prices could remain high due to the EU’s partial ban on Russian imports, the easing of Covid restrictions in China and the peak season of driving in the United States,” Scholar said.

With supplies tight, Saudi Arabia has raised the price of the oil it sells to Asia.

Adding to the optimistic mood were comments from US trade chief Gina Raimondo that she was considering lifting tariffs on some products from China to help fight inflation.

In foreign currencies, the pound was higher before the vote of confidence in Johnson’s leadership.

“Markets reacted favorably to the announcement of the contest, with the pound appreciating,” noted Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

“This seems to reflect the general principle that markets favor Conservative governments, and the chances of the Conservatives winning the next election are likely to be higher under a new leader.”

Johnson’s public image has suffered over the past year, not least because of the “Partygate” controversy which saw him become the first sitting British prime minister to break the law.

The Conservative government has also come under pressure from a cost of living crisis in Britain, while UK inflation is at its highest level in four decades, driven by soaring oil prices and some gas.


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Felix J. Dixon