Stocks in London bounded into the new week, though volumes are likely to be low with US markets sitting out Monday's session for the Independence Day holiday.

Oil majors were pushing the blue-chip FTSE 100 index higher, while the FTSE 250 was weighed down by share price declines for Grafton Group and Pets at Home.

The UK flagship index was up 81.41 points, or 1.1%, at 7,250.06. The FTSE 250 index was up 23.13 points, or 0.1%, at 18,660.11. The AIM All-Share index was up 3.81 points, or 0.4%, at 879.02.

The Cboe UK 100 index was up 1.3% at 723.15. The Cboe 250 was up 0.2% at 16,244.62, though the Cboe Small Companies was 0.1% lower at 13,269.75.

In mainland Europe, the CAC 40 stock index in Paris was up 0.9%, while the DAX 40 in Frankfurt was up 0.4%.

Stocks endured a difficult first half of the year, with recessionary and inflationary fears hitting sentiment. The opening gambits from the third quarter have seen some calm return to markets, however.

ING commented: ‘July has historically been considered a low-volatility month in global markets: this year, this notion may fall quite far from reality. Even if global equities have mostly embedded the new inflation-focused approach by the Fed and other major central banks, the depth of the upcoming global slowdown remains highly uncertain, leaving risk assets in a rather fragile state for now.’

In Tokyo on Monday, the Nikkei 225 closed 0.8% higher. In China, the Shanghai Composite ended up 0.5%, while the Hang Seng in Hong Kong was down 0.2% in late trade.

China placed 1.7 million people under lockdown in central Anhui province, where authorities reported nearly 300 new cases Monday in the latest of a string of outbreaks testing Beijing's no-tolerance approach to Covid-19.

The country is the last major economy wedded to a zero-Covid strategy, responding to all cases with strict isolation orders and tough testing campaigns.

The outbreak in Anhui – where officials first found hundreds of cases last week – comes as the Chinese economy begins to rebound from a months-long lockdown in Shanghai and disruptive Covid restrictions in the capital Beijing.

In Sydney, the S&P/ASX 200 surged 1.1%. The Reserve Bank of Australia will be in focus on Tuesday as it announces its latest cash rate decision. The market has priced in a 50 basis point hike to 1.35% from 0.85%, according to consensus cited by FXStreet.

Still to come on Monday's economic calendar is a eurozone producer price inflation report at 1000 BST.

The pound was quoted at $1.2122 early Monday in London, up from $1.2034 at the equities close on Friday. The euro was priced at $1.0435, up from $1.0406. Against the safe haven Japanese yen, the dollar was trading at JP¥135.44, up from JP¥135.19.

Already out, figures showed Germany registered a surprising trade deficit in May as imports surged and exports to Russia continued to decline year-on-year in the wake of the Kremlin's invasion of Ukraine.

According to Destatis, Germany swung to a trade deficit of €1.0 billion in May, from a surplus of €3.1 billion in April. The trade surplus in May 2021 stood at €13.4 billion.

The May 2022 deficit fell short of market expectations of a surplus of €2.4 billion, according to FXStreet.

At €125.8 billion, exports were down 0.5% monthly in May but up 12% yearly. Imports stood at €126.7 billion, up 2.7% monthly and 28% annually.

Exports to Russia were down 55% annually in May, Destatis noted. However, on a monthly basis, exports to Russia were 29% higher. They had dropped 9.9% monthly in April and roughly 60% in March.

Imports from Russia fell 9.8% monthly in May.

Brent oil was quoted at $111.68 a barrel early Monday, up from $110.84 late Friday.

Oil producers, among the laggards in the London market on Friday, were on the up on Monday.

Harbour Energy climbed 4.4%, BP added 4.0% and Shell rose 3.1%.

Pets at Home fell 5.7%. RBC cut the stock to 'underperform' from 'sector perform'. Home furnishings retailer Dunelm lost 3.7% as RBC cut its recommendation to 'sector perform' from 'outperform'.

Grafton fell 7.9%. The Selco owner said Gavin Slark plans to step down as chief executive, after 11 years at the helm.

He will stay on as Grafton's boss until the end of the year, ‘in line with his service agreement’.

‘A process to appoint a successor will commence immediately with the support of an executive search firm,’ the DIY retailer said.

On AIM, nanosynth group surged 22% as it updated shareholders on recent fortunes and turnaround plans.

The digital monitoring and safeguarding systems manufacturer said its partnership with Volz Holdings remains of ‘great value’ despite demand for surgical masks waning as Covid worries ease. The plan for the pact is to take technology developed to use it directly within products in the heating, ventilation, and air conditioning market, nanosynth said on Monday.

It also moved to defend the pace of its turnaround progress and noted its ‘irregular newsflow’.

It said: The group would like to emphasise that good momentum is being gained and updates are being provided to shareholders when appropriate to do so and in accordance with the company's regulatory obligations.‘

AO World tumbled 17%. The Sunday Times reported that Atradius, a credit insurer, has cut its credit cover for the online retailer's suppliers.

Credit cover is crucial aspect of the retail supply chain. It provides cover for firms should customers not pay debts in time or at all. Without cover, suppliers would usually require upfront payments to be made, the Sunday Times noted.

AO World may now face pressure to clarify its cash position, analysts at Shore Capital Markets said.

Gold was quoted at $1,808.35 an ounce early Monday, up slightly from $1,806.73 late Friday.

Still to come on Monday's economic calendar is a eurozone producer price inflation report at 1000 BST.

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Issue Date: 04 Jul 2022