Stocks in London made a strong start to the week, as the UK economy registered growth in July, despite underachieving against market expectations.
The UK economy expanded 0.2% month-on-month in July, the Office for National Statistics said. This marked a recovery from June's 0.6% slide, but undershot market forecasts for 0.5% growth.
July's hot weather, the Commonwealth Games and the Women's Euros were cited for most of the rebound which was nonetheless viewed as underwhelming amid a wider cost-of-living crisis.
The FTSE 100 index closed up 121.96 points, or 1.7% at 7,473.03 on Monday. The FTSE 250 ended up 325.84 points, or 1.7%, at 19,513.87. The AIM All-Share closed up 5.67 points, or 0.6%, at 886.27.
The Cboe UK 100 ended up 1.5% at 746.95, the Cboe UK 250 closed up 1.8% at 16,829.10, and the Cboe Small Companies ended up 1.5% at 13,126.74.
The London Stock Exchange will be closed on Monday next week for the funeral of Queen Elizabeth II, which has been declared a bank holiday in the UK.
In addition, UK politics as normal will been largely put on hold during the 10-day period of mourning for the Queen, which lasts until her funeral.
Nonetheless, on Monday, the UK prime minister's official spokesman said the government still intends to hold the fiscal event before the end of the month, as previously promised by PM Liz Truss.
No date has yet been set for a fiscal event which aims to set out government funding for a batch of major interventions in the cost-of-living crisis.
The pound was quoted at $1.1698 at the London equities close Monday, up from $1.1580 at the close on Friday.
In European equities on Monday, the CAC 40 in Paris ended up 1.7%, while the DAX 40 in Frankfurt ended up 2.4%.
The DAX 40's performance came despite one of Germany's leading economic research institutes cutting the nation's forecast for growth in the coming year.
The ifo institute said in its autumn forecast released on Monday that it expects economic output to rise by 1.6% this year as a whole, and to shrink by 0.3% next year. It also predicted a winter recession for Europe's largest economy.
‘The cuts in gas supplies from Russia over the summer and the drastic price increases they triggered are wreaking havoc on the economic recovery following the coronavirus,’ said Timo Wollmershauser, who is ifo's head of forecasts.
Joachim Nagel, president of Germany's central bank, said the European Central Bank will need to continue to raise interest rates, Bloomberg reported on Sunday.
‘Thursday's step was a clear sign and if the inflation picture stays the same, further clear steps must follow,’ Nagel told Deutschlandfunk in a radio interview on Sunday.
On Thursday, The ECB unveiled a record 75 basis point rate hike.
The euro stood at $1.0128 at the European equities close Monday, higher against $1.0003 at the same time on Friday.
Against the yen, the dollar was trading at JP¥142.35 late Monday, lower compared to JP¥142.53 late Friday.
Bank of Japan Governor Haruhiko Kuroda said the yen's recent struggles are undesirable, Reuters reported on Friday.
The yen is currently priced at levels not seen since 1998, despite its status as a safe-haven currency in the midst of the war in Ukraine.
‘Sharp currency moves are undesirable as they destabilise corporate business plans and heighten uncertainty,’ Kuroda told reporters after the meeting.
Retailers were among the top performers in the FTSE 100 on Monday.
The sector was benefiting from a positive read-across after JPMorgan placed supermarket chain Tesco and Portuguese retailer Jeronimo Martins on 'positive catalyst watch'.
Tesco shares finished 5.5% higher. Supermarket peer Sainsbury was 5.3% higher, while DIY retailer Kingfisher topped the blue-chip index to close up 6.5%.
In the FTSE 250, Serco closed down 6.5%. The outsourcer said its Chief Executive Rupert Soames will step down from at the end of December, and promoted division head Mark Irwin to become the new CEO.
‘Soames is widely credited as reviving Serco's fortunes. He restored the outsourcing group's credibility after the electronic tagging scandal where Serco took responsibility for three offences of fraud and two of false accounting between 2010 and 2013,’ explained Russ Mould, investment director at AJ Bell.
Ferrexpo closed up 11% on news that Russian troops were withdrawing from key areas of Ukraine's Kharkiv region.
Ferrexpo produces iron ore in Ukraine.
President Volodymyr Zelensky on Saturday evening said that, since the beginning of the month, the Ukrainian army recaptured around 2,000 square kilometres of territory in areas previously occupied by Russia as part of Kiev's counter-offensive.
Elsewhere in London, UK Oil & Gas fell 18% after carrying out a £3.0 million share placing to help fund its Phase 2 Turkey seismic programme.
The UK and Turkey-focused exploration and production company raised £3.0 million via a placing of 3.43 billion shares at a price of 0.0875p each. This represented a 20% discount to its closing price of 0.1098p per share on Friday.
Stocks in New York were higher at the London equities close, with the Dow Jones Industrial Average up 0.8%, the S&P 500 index up 1.0%, and the Nasdaq Composite also up 1.0%.
Due on Tuesday, the US consumer price index reading is expected to show the annual US inflation rate softening to 8.1% in August from 8.5% in July, according to FXStreet. In June, the rate had topped 9%.
‘With the Fed now in its self-imposed communications blackout period ahead of next Wednesday's FOMC meeting, all eyes will be on this week's data docket - in particular, Tuesday's August CPI release,’ said Deutsche Bank.
The US Federal Reserve is widely expected to raise interest rates by another 75 basis points this month.
Brent oil was quoted at $94.63 a barrel at the London equities close Monday, up from $91.75 late Friday.
Gold was quoted at $1,731.11 an ounce at the London equities close Monday, up sharply against $1,715.81 at the close on Friday.
In Tuesday's UK corporate calendar, there is a trading statement from online supermarket Ocado and half-year results from premium drink mixers maker Fevertree.
In the economic calendar, there is UK employment at 0700 BST following by US CPI data in the afternoon. Germany and Spain will also publish CPI data at 0700 and 0800 BST, respectively.
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