A stronger pound was holding back the FTSE 100 early Monday, but market mood was positive due to moves by China to ease its strict Covid restrictions, which hindered economic activity.
The FTSE 100 index opened up 3.54 points, 0.1%, at 7,559.77. The FTSE 250 was up 15.37 points, 0.1%, at 19,378.65, but the AIM All-Share was down 0.88 points, 0.1%, at 852.44.
The Cboe UK 100 opened marginally higher at 756.23, the Cboe UK 250 was marginally lower at 16,788.62, and the Cboe Small Companies was down 0.1% at 13,044.88.
London’s FTSE 100 index was held back by a stronger pound, which held back its overseas earners that report in dollars.
The dollar was weaker, with sterling quoted at $1.2295 early Monday, higher than $1.2240 at the London equities close on Friday, though off earlier pricing above $1.23. The euro traded at $1.0541, up from $1.0478. Against the yen, the dollar was quoted at JP¥135.11, down from JP¥135.41.
A weaker dollar helped to drive up the price of gold, which was quoted at $1,798.49 an ounce early Monday, higher than $1,788.36 on Friday.
The Confederation of British Industry economists have forecast that from the highest to the lowest point in the recession, UK gross domestic product will drop by 0.7%.
The CBI estimates that GDP will drop by 0.4% in 2023, then return to growth the following year when it rises 1.6%.
It is a considerably more positive forecast than that produced by the Bank of England just a month ago, when the central bank predicted a drop of 1.5% in 2023 and a further fall of 1% in 2024.
The CBI said that the Bank was working on the assumption that the interest base rate would be higher than its economists have forecast.
But the CBI’s forecast remained grim reading as it showed the UK lagging behind many of its international peers.
In European equities on Monday, the CAC 40 index in Paris opened down 0.3%, while the DAX 40 in Frankfurt was down 0.4%.
In China on Monday, the Shanghai Composite closed up 1.8%, while the Hang Seng index in Hong Kong was up 4.3%. In Tokyo, the Nikkei 225 index closed up 0.2%. The S&P/ASX 200 in Sydney closed up 0.3%.
Chinese markets rallied as the country announced further easing of its restrictive Covid measures.
In Shanghai, authorities will scrap some testing requirements as China continues to loosen its strict zero-Covid policy following recent protests across the nation. Shanghai follows multiple cities including Beijing, Tianjin, Shenzhen and Chengdu, which all cancelled the testing requirement for public transport on Saturday.
In the FTSE 100, Vodafone added 1.9%, as it announced Chief Executive Nick Read will step down on December 31 after 20 years at the telecommunications firm and four as CEO.
Chief Financial Officer Margherita Della Valle will step up as an interim CEO, in addition to continuing her role as CFO. The board has begun a process to find a replacement CEO.
Vodafone shares are down 44% over the past four years.
‘Nick Read’s decision to step down as CEO suggests that the board appreciates the scale of the challenges it faces, and is now intent on injecting some urgency into the recovery of shareholder value,’ commented Jefferies.
‘However, the next question is what solutions are really available to the next CEO? Vodafone faces intractable headwinds. We think dividend policy should be treated as under review.’
Last month, Vodafone declared an interim dividend of 4.50 euro cents, unchanged from a year prior.
Glencore rose 1.3%, as the miner reached a settlement with the Democratic Republic of Congo over alleged corruption in the country.
This covers ‘all present and future claims arising from alleged acts of corruption’ in the period between 2007 and 2018.
Glencore International will pay the DRC $180 million, on behalf of its Congolese-associated companies.
‘This includes activities in certain group businesses that have been the subject of various investigations by, amongst others, the US Department of Justice and the DRC’s National Financial Intelligence Unit and Ministry of Justice,’ the miner said.
Other blue-chip miners were making gains in early trading, buoyed by the positive developments in China that could signal a rebound in demand for commodities. Rio Tinto added 2.0%, Fresnillo rose 1.6%, and Anglo American was up 1.3%.
Asia-focused insurer Prudential was up 3.4%.
Meanwhile, Persimmon fell 1.6% as Jefferies cut the housebuilder’s stock to ’hold’ from ’buy’.
In the FTSE 250, National Express shed 0.6%, as it named James Stamp as its new chief financial officer with immediate effect.
Stamp has served as interim CFO since the beginning of November, and been with the bus operator since 2017.
China-focused investment trust Fidelity China Special Situations jumped 5.1%, on news of the easing of the country’s zero-Covid measures.
On AIM, Wentworth Resources surged 20% to 30.00 pence.
The Tanzania-focused natural gas producer agreed the terms of a potential takeover by Etablissements Maurel & Prom. The offer is for 32.5p per share in cash, valuing Wentworth at around £61.7 million.
The offer is a premium of around 30% to the closing price of 25.0p on Friday.
Wentworth’s directors consider the offer to be ‘fair and reasonable’, and recommend its shareholders vote in favour of the takeover at the upcoming court and general meetings.
Brent oil was trading at $86.26, flat compared to $86.65 late Friday, as the EU embargo and price cap on Russian oil becomes effective.
Imports of Russian crude oil now are prohibited in the EU, with limited exemptions. The embargo, agreed in a package of sanctions to punish Russia for invading Ukraine, technically entered into force after adoption but allowed for a transition period for EU member states to phase in the ban.
At the same time, a price cap on seaborne Russian oil, designed to hit Kremlin revenues from energy exports, is now also in effect and limits exports to other countries at $60 per barrel.
On Sunday, the Organization of the Petroleum Exporting Countries, led by Saudi Arabia and Russia, agreed to maintain their current output levels.
In Monday’s economic calendar, there are services PMI prints for the UK at 0930 GMT and the US at 1445 GMT. There are also EU retail trade figures at 1000 GMT.
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