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Traders returning after the long weekend were in upbeat mood today as the FTSE 100 index rallied more than 1%.
The rise came despite more inflation worries, with the price of Brent crude still above $120 a barrel after Thursday’s Opec meeting failed to deliver the supply boost expected.
US markets fell sharply on Friday as more evidence of a tight jobs market doused expectations that policymakers might be able to pause interest rate hikes in the autumn.
FTSE 100 rallies, Melrose and Prudential surge 4%
10:25 , Graeme Evans
GKN’s blue-chip owner today revealed it is to bank £520 million as part of a landmark deal in the United States.
Melrose Industries said its sale of standing desk business Ergotron marked the final exit from the wider Nortek air management-to-home automation business it bought in 2016.
The FTSE 100-listed company, whose current interests span automotive, aerospace and powder metallurgy, said it had doubled shareholders' initial investment in Nortek and transformed the businesses themselves.
It plans to announce how it intends to use the Ergotron proceeds closer to the deal’s completion date, due in the autumn.
However, Melrose shares rose 4% or 5.45p to 138.85p as the move is likely to fuel hopes of a further return of cash to shareholders on top of the £729 million handed out in September.
Melrose delayed a return in March because of the Ukraine war but said that it hoped to resume payments at the earliest opportunity.
Its shares were near the top of a packed FTSE 100 risers board, with Rolls-Royce and Prudential also 4% higher as traders returned to their desks in upbeat mood following the long weekend.
The easing of Covid restrictions in China was a factor in the FTSE 100 lifting 1.2% or 91.71 points to 7624.66 as the Pru rallied 46p to 1064p and miners including Anglo American and Antofagasta improved 3%.
With the Brent crude price still above $120 a barrel after Thursday’s Opec meeting failed to deliver a meaningful boost to output, BP shares lifted 3% or 12.45p to 443.75p.
Elsewhere in the oil industry, shares in North Sea-focused producer Serica Energy rose 9% after it allayed fears over the impact of the Government’s planned windfall tax.
The AIM-listed company, which operates the Bruce, Keith and Rhum fields, pointed out that the levy is part of a package that includes significant investment incentives “designed to encourage companies like Serica to continue to reinvest profits”.
Serica’s shares jumped 21.5p to 273p, still short of the 400p seen in mid-April.
For Eve Sleep shareholders, however, a 24% slide will make for more sleepless nights after the mattress retailer warned it will not meet expectations for the current year. It has launched a strategic review to secure a new owner or investment partner. Shares slumped 0.35p to 1.3p.
Opec plans keep oil above $120 a barrel
08:08 , Graeme Evans
Disappointment at Opec’s plans for only a modest increase in monthly rates of output at its meeting in Vienna last Thursday means Brent crude remains above $120 a barrel.
There had been hopes the oil cartel might exclude Russia’s sanctions-hit production from its calculations so that other countries are able to pump more to ease the upward pressure on prices.
Opec’s failure to divert from its existing plans for July and August resulted in Brent recording a weekly rise, with demand pressures continuing as China relaxes Covid controls and the US driving season gets underway.
Asia markets offset US rate rise worries
07:44 , Graeme Evans
Strong trading in Asia means European markets are starting the week on the front foot, despite the heavy losses on Wall Street on Friday.
The easing of Beijing’s Covid restrictions and speculation that the US will lift some China tariffs in an effort to curb inflationary pressures contributed to the gains for the Shanghai Composite and Hang Seng in Hong Kong.
The FTSE 100 index fell 75 points on Wednesday but is expected to open 68 points higher at 7,601 when trading resumes after the long weekend.
US futures markets are also pointing higher after Friday’s rout, when the S&P 500 fell 1.6% and the tech-focused Nasdaq slid 2.5%.
The losses reflected renewed fears of aggressive monetary policy tightening by the Federal Reserve as labour market figures showed that the US economy added a bigger-than-expected 390,000 payrolls in May.
The latest evidence of a tight jobs market came as Federal Reserve policymakers reiterated their resolve on bringing inflation back under control.
This included vice-chairman Lael Brainard, who said the case for a pause in rate rises in September following expected half point rises in June and July was a hard one to make.
Much is likely to depend on the detail of Friday’s inflation report, when the annual rate of the US consumer prices index is expected to remain close to last month’s 8.3%.