Stocks, oil prices rise on China boost

• Global stock markets and oil prices rose on Monday.
• Saudi Arabia has raised the price of the oil it sells to Asia.
• UK pound was higher heading into the confidence vote on Johnson’s leadership.

Global stock markets and oil prices rose on Monday, aided by a reduction in Covid lockdowns in China, the world’s second-largest economy.

London’s stock exchange, reopening after a British public holiday to commemorate Queen Elizabeth II’s Platinum Jubilee, shrugged off news that embattled British Prime Minister Boris Johnson would face a confidence vote from his own Tory party on Monday.

Elsewhere, eurozone stocks climbed ahead of a European Central Bank meeting Thursday when the ECB is is set to draw a line under its massive bond-buying stimulus programme.

Wall Street ended last week in the red as news of larger-than-expected jobs creation in the United States gave the Federal Reserve room to continue hiking interest rates amid decades-high inflation.

Stocks “have started the week on a positive note buoyed by a strong US jobs report on Friday”, noted Victoria Scholar, head of investment at Interactive Investor.

Traders took heart also from a wind-down of Covid containment measures in China that have crippled its economy for months.

With infections trending down in major cities including Shanghai and Beijing, authorities have allowed some sense of normality to return, raising hopes for a pick-up in consumer activity.

“Positive news around Chinese economic activity and cheaper equity valuations could offer value from a long-term investment perspective, but volatility will remain high in the short-term,” noted Diana Mousina, of AMP Capital.

Oil prices extended recent gains as a pledge by OPEC and other major producers to boost output fell short of what markets hoped for.

“Despite OPEC+’s increased output, prices could remain elevated driven by the EU partial ban on Russian imports, the easing of covid restrictions in China and peak driving season in the United States,” said Scholar.

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

Read more: Stocks climb after China rate cut

Adding to the upbeat mood were comments from US commerce chief Gina Raimondo that she was considering lifting tariffs on some goods from China to help in the battle against inflation.

In foreign exchange, the British pound was higher heading into the confidence vote on Johnson’s leadership.

“Markets have responded favourably to the news of the contest, with sterling appreciating,” noted Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

“This appears to reflect the general principle that markets favour Conservative governments, and the chances of the Tories winning the next election likely will be higher under a new leader.”

Johnson’s public image has suffered in the last year, most notably as a result of the “Partygate” scandal, which saw him become the first serving British prime minister to be found to have broken the law.

The Conservative government has also faced pressure from a cost-of-living crisis in the United Kingdom, where inflation has reached its highest level in four decades, owing to rising oil and gas prices.

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