FTSE 100 and Wall Street up as Europe warned on energy

·4-min read
FTSE 100  A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 13, 2022.  REUTERS/Brendan McDermid
The FTSE 100 and Wall Street have both started the week on the front foot. Photo: Brendan McDermid/Reuters

The FTSE and European stock markets were up on Monday even as the International Energy Agency said European leaders need to cut energy consumption ahead of winter.

The FTSE 100 (^FTSE) climbed 0.8%, France's CAC (^FCHI) rose 0.8% and Germany's DAX (^GDAXI) climbed 0.5% as the closing bell rang.

Across the pond, the Dow Jones (^DJI) rose 0.5% as trading ceased in Europe. The S&P 500 (^GSPC) advanced 0.7%, while the tech-heavy Nasdaq (^IXIC) gained 1.1%.

In London, the blue-chip index was led by miners, which staged a rebound after the recent sell-off.

Topping the FTSE 100 was Glencore (GLEN.L), up 5% on the back of the reviving copper price. Following in its wake were Antofagasta (ANTO.L), up 4.4% Anglo American (AAL.L), up 4.3%, and Rio Tinto (RIO.L), up 3.4%.

"European markets have picked up where they left off on Friday with another strong performance, after Fed officials dialled back expectations of a 100bps rate rise next week," Michael Hewson, chief market analyst at CMC Markets, warned.

"While sentiment today seems a lot more buoyant, one needs to be careful before drawing too many conclusions from two consecutive strong sessions. Last week the DAX dropped to its lowest levels in 18 months before bouncing back, and is still quite close to that, so today’s gains may well be no more than another bear market rebound."

Meanwhile, Haleon (HLN.L), the consumer healthcare product arm of GSK (GSK.L) started trading on Monday, becoming the biggest new listing in London in 2022.

Haleon has gone straight into the FTSE 100 index, where GSK also will remain. It will not be issuing new shares as part of its flotation. Rather, existing investors in GSK will get one share in the new company for each current one they own.

Haleon made its debut at 330p a share, valuing the business at £30.4bn ($36.4bn/€35.8bn).

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Direct Line (DLG.L) dropped 7.5% after it issued a profit warning. This also dragged down FTSE 100 rival Admiral Group (ADM.L).

“There was a decent start to markets on Monday, with the FTSE 100 jumping 1.1% higher to 7,238. Leading the UK market higher were oil stocks Shell (SHEL.L) and BP (BP.L), banking group HSBC (HSBA.L) and the big miners,” said Danni Hewson, financial analyst at AJ Bell.

“Even cryptocurrencies managed to find some new friends after letting investors down in recent months. Bitcoin (BTC-USD) jumped 6.4% and ethereum (ETH-USD) traded 8.3% higher. Commodities joined the parade, with Brent crude oil (BZ=F) advancing 2.5%.

“Investors seem to be taking the view that the US Federal Reserve will not be overly aggressive with the pace of interest rate hikes, in the belief that the central bank would not want to risk plunging the country into economic turmoil."

The International Energy Agency’s executive director Fatih Birol said in a report that the gas crisis had put Europe in a precarious position.

"The situation is especially perilous in Europe, which is at the epicentre of the energy market turmoil. I’m particularly concerned about the months ahead," he said.

Read more: UK high streets deserted as heatwave hits

Birol urged European leaders to urgently slash gas consumption ahead of winter in order to make up for cuts to Russian energy supplies.

Asian markets finished higher as Chinese and Hong Kong shares made gains. The Hang Seng (^HSI) gained 2.4% in Hong Kong and the Nikkei 225 (^N225) rose 0.5% in Tokyo. The Shanghai Composite (000001.SS) climbed 1.4%.

Meanwhile, oil prices are hovering above the $100 mark. Brent crude oil was trading at $105 on Monday after US president Joe Biden failed to secure output hike agreements with Saudi Arabia, the world’s top oil exporter.

Naeem Aslam, chief market analyst at Avatrade said: "Traders got one clear message from Biden’s recent visit to Saudi Arabia, during which president Biden spoke to a number of Arab leaders.

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"The message is that it is OPEC+ that makes the oil supply decision, and the cartel isn’t remotely interested in what Biden is trying to achieve. OPEC+ will continue to control oil supply, and one country alone cannot determine the oil supply — at least that is the message that traders have taken from Biden’s visit to Saudi Arabia."

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