Share prices were rising on Monday, after the US said it may de-escalate its trade war with China and the head of the European Central Bank said it will normalize monetary policy this year.

The FTSE 100 index was up 75.85 points, or 1.0%, at 7,465.83 midday on Monday. The mid-cap FTSE 250 index was up 249.81 points, or 1.3%, at 20,085.76. The AIM All-Share index was up 9.14 points, or 1.0%, at 965.78.

The Cboe UK 100 index was up 1.1% at 744.38. The Cboe 250 was up 1.2% at 17,778.53, and the Cboe Small Companies was up 0.3% at 14,708.76.

In mainland Europe, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.6%.

US President Biden said he is considering lifting some Donald Trump-era trade tariffs imposed on China. Tariffs on hundreds of billions of dollars of Chinese imports are due to expire in July, and Biden has faced growing calls to get rid of the punitive duties to help combat the highest US inflation in more than four decades.

The president also said a recession in the US was not inevitable but acknowledged the economic pain felt by American consumers, saying ‘this is going to take some time’.

Ending the tariffs on goods from China could help cut roaring US inflation by making imports cheaper. It also could help calm economic tension between the two countries.

‘Investors see this as a possible de-escalation of the trade war between the two economic superpowers, and this has revived trading optimism towards riskier assets. However, major bearish leverages still linger for stocks and analysts expect markets to remain extremely volatile as long as no significant progress is registered on the geopolitical, monetary/economic and virus fronts - especially after Beijing registered another record number of new Covid cases,’ ActivTrades analyst Pierre Veyret commented.

‘More clues about those market drivers, especially regarding the economic outlook, may be provided this week as traders await major data...alongside another batch of speeches from [Federal Reserve, European Central Bank and Bank of England] speakers.’

In New York on Monday, stocks were seen opening higher. The Dow Jones Industrial Average and S&P 500 were called up 0.8%. The Nasdaq Composite was pointed 0.7% higher.

Focus will be on the Federal Reserve on Wednesday, with minutes from its latest meeting released. At the early May meeting, the Fed raised interest rates by half a percentage point.

The European Central Bank will probably draw a line under the era of negative interest rates by September, President Christine Lagarde said on Monday.

The ECB is ‘likely to be in a position to exit negative interest rates by the end of the third quarter’, Lagarde wrote in a blog post.

First, the end of the bank's bond-buying stimulus programme ‘very early in the third quarter’ would pave the way for a ‘rate lift-off at our meeting in July’, she said. The initial hike would be the ECB's first in over a decade and would lift rates from their current historically low levels.

These include a minus 0.5% deposit rate which effectively charges banks to park their excess cash at the ECB overnight.

The euro got a boost from Lagarde's statement. The single currency advanced to $1.0663 midday London time on Monday, from $1.0547 late Friday. The euro hit $1.0687 on Monday morning, a one-month high.

The pound climbed to $1.2574 from $1.2463. Against the yen, the dollar faded to JP¥127.48 from JP¥127.86.

On the London Stock Exchange, Kainos shares jumped 22%.

The FTSE 250-listed software firm said revenue in the financial year that ended March 31 climbed 29% to £302.6 million from £234.7 million. The figure topped a £297 million forecast from Shore Capital Markets.

Pretax profit declined 8.6% to £46.0 million from £50.3 million.

Bookings were up 35% to £349.8 million from £258.8 million.

Product annual recurring revenue jumped 45% to £34.3 million from £23.6 million. Its contracted backlog ended the period at £259.7 million, rising from £206.2 million at the same point a year prior.

The Belfast-based company provides digital services to the public sector, healthcare market and commercial customers. In addition, it is a partner of Pleasanton, California-based enterprise software provider Workday.

Moonpig rose 9.0% as it unveiled the £124 million acquisition of Smartbox, which trades as Buyagift and Red Letter Days. The new acquisition is a provider of physical and experiential gifts.

It is a ‘step-change’ from Moonpig's current proposition, the online greeting cards firm said. The UK gift experiences market is worth £6 billion, Moonpig said.

‘This deal makes a lot of sense,’ said Davy Research. ‘It advances the cause in terms of growing the gifting revenue line; experiential gifting is digitally led and super-efficient as a result; and one imagines the cross-selling revenue synergies as meaningful.’

Among blue-chips, DIY retailer Kingfisher rose 2.6%. It said first-quarter sales were above pre-pandemic levels but had weakened year-on-year.

The owner of the B&Q chain of DIY stores also unveiled a £300 million share buyback.

Kingfisher said group sales in the three months to April 30 fell 5.8% year-on-year to £3.25 billion. At constant currency, sales were down 4.2%. On a like-for-like basis, they were 5.4% lower.

Sales were 16% higher on a like-for-like basis compared to three years earlier, before the onset of the pandemic.

Kingfisher said it is managing inflationary pressures well and stock availability is approaching pre-virus levels. It backed its annual financial guidance.

DIY retail chain Wickes rose 2.1% in a positive read-across. Grafton shares were 3.1% higher.

On AIM, Judges Scientific shares rose after it reported that it bought Geotek Holding and Geotek Coring for up to £80 million in its largest acquisition to date.

The London-based scientific instrument sector investor will pay an initial cash consideration of £45 million on completion. Further, it will pay a contingent consideration of up to £35 million through a mixture of cash and new ordinary shares in Judges.

Geotek Holding is a developer and manufacturer of instruments used to measure and log various characteristics of geological cores, while Geotek Coring is a supplier of related services.

Judges expects the acquisition to be ‘materially’ earnings enhancing for 2022.

Gold was priced at $1,861.69 an ounce midday Monday in London, up from $1,846.32 late Friday. Brent oil was trading at $113.93 a barrel, up from $112.40.

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Issue Date: 23 May 2022