London stocks rise again as rate rise fears calm

London’s markets extended their recent gains on Monday as concerns over inflation and rate rises cooled on a sweltering day in the City.

A strong opening on Wall Street helped to support trading during the afternoon session, buoyed by suggestions from Fed officials that they would dial back their rate rise plans.

Bank of England policymaker Michael Saunders warned that rates may have to rise to 2% or higher in the next year to rein in rocketing inflation but it failed to knock buying traders off their stride.

The FTSE 100 ended the day up 64.23 points, or 0.9%, at 7,223.24.

Chris Beauchamp, chief market analyst at IG, said “equities are making progress” across the board after being supercharged by a better-than-expected showing by Goldman Sachs in the US.

“The tough outlook for insurers may have wiped another 7% off Admiral thanks to Direct Line’s update this morning, but the index is still solidly higher, led by hopes of a recovery in business for a swathe of sectors, including banks, oil and housebuilders,” he added.

“For now the bounce has some strength to it, helped along by hopes that inflation might be easing, but the rally in oil, while great for BP and Shell, means the worst may not be over.”

The price of oil was boosted by easing economic fears and the meeting between President Joe Biden and Saudi Crown Prince Mohammed bin Salman, which resulted in a fist bump but no commitment to increased oil output.

Brent crude increased by 4.49% to 105.7 US dollars per barrel when the London markets closed.

Elsewhere in Europe, the sentiment was also positive despite concerns over the potential for Russia to disrupt gas supplies.

The German Dax increased 0.74% by the end of the session while the French Cac improved by 0.93%.

Meanwhile, sterling recoiled slightly after a recent improvement had guided it above 1.200, its highest level in over a week.

The pound was down 0.29% against the dollar at 1.198 but was 0.04% higher against the euro at 1.178 at the close.

In company news, Deliveroo shares moved higher despite cutting its annual sales outlook after revealing waning demand for takeaways as the cost-of-living crisis starts to bite.

The delivery firm saw recovered from an early dip to close 5.9p higher at 91p.

Euromoney Institutional Investor saw shares make major gains after the financial publisher agreed a £1.7 billion private equity takeover.

The 1,461p-per-share approach was given the thumbs up after a number of previous offers, ranging between 1,175p and 1,350p, had been rejected.

Shares in the business were 126p higher at 1,454p at the end of play.

Elsewhere, Direct Line became the latest insurer to warn over profitability as soaring prices of car parts, repairs and motors pushes up the cost of claims.

The company dropped by 22.75p to 193.65p after it said the cost of increased claims is lagging behind rises in premiums.

The biggest risers in the FTSE 100 were Antofagasta, up 44.6p at 1,037p, M&G, up 8.65p at 205p, Burberry up 57p at 1,643.5p, Harbour Energy, up 11.4p at 338.3p, and Anglo American, up 87.5p at 2,637.5p.

The biggest fallers of the day were GSK, down 329.4p at 1,389.8p, Admiral, down 144p at 1,738p, Aviva, down 5.8p at 390.8p, Segro, down 13p at 1,015.5, and Hikma, down 21p at 1,678p.