European stocks, pound up awaiting new British PM

AFP , Monday 24 Oct 2022

European stocks and the pound climbed Monday as markets awaited confirmation that former finance minister Rishi Sunak would become Britain's new prime minister.

EU flag
A European Union flag flies outside the Houses of Parliament, in London, Wednesday, Oct. 19, 2022. AP


European equities climbed despite data showing Britain and Germany headed for recession and a plunging Hong Kong stock market as Chinese President Xi Jinping handed key economic posts to loyalists behind his zero-Covid strategy.

The sentiment was boosted by hopes the Federal Reserve would soon slow its pace of interest rate hikes and by the news that European gas prices were at a four-month low.

The reference Dutch TTF gas price on Monday dipped below 100 euros for the first time since June, reaching 98.60 euros per megawatt hour at around 1030 GMT.

All eyes were on Britain, set for its third prime minister in less than two months following the resignations of Boris Johnson and Liz Truss.

"The pound started the week trading higher as many see the new potential PM as a source of some stability, particularly when compared to the chaotic term served by the Truss government which saw massive volatility across markets," noted XTB chief market analyst Walid Koudmani.

Yields on UK government bonds also dropped following recent surges in the wake of Truss's disastrous budget that led to her downfall.

Elsewhere, the embattled yen saw only a brief rally against the dollar on speculation that Japanese authorities stepped in to support their currency for the second time in as many sessions.

Focus was also on the euro after new Italian Prime Minister Giorgia Meloni took office.

Meloni's post-fascist Brothers of Italy scored a historic victory in general elections on September 25.

Her new government is the most far-right in Italy since World War II, and takes power at a time of decades-high inflation and an energy crisis linked to Russia's invasion of Ukraine.

Milan's stock market was up 1.3 percent in early afternoon trading on Monday, mirroring strong gains in Frankfurt and Paris.

London was up only slightly, with the stronger pound and falling oil and gas prices weighing on the heavyweight energy sector, according to traders.

The eurozone was meanwhile looking ahead to Thursday when the European Central Bank is expected to announce another bumper rise in interest rates aimed at curbing sky-high prices.

On the corporate front, Dutch medical device manufacturer Philips announced it would axe 4,000 jobs after its recall of faulty sleep respirators pushed it into a loss.

Following the news, the group's share price dropped 0.8 percent on the Amsterdam stock exchange.

Key figures around 1100 GMT

London - FTSE 100: UP 0.2 percent at 6,980.53 points

Frankfurt - DAX: UP 1.3 percent at 12,891.41

Paris - CAC 40: UP 1.5 percent at 6,123.30

EURO STOXX 50: UP 1.3 percent at 3,521.53

Tokyo - Nikkei 225: UP 0.3 percent at 26,974.90 (close)

Hong Kong - Hang Seng Index: DOWN 6.4 percent at 15,180.69 (close)

Shanghai - Composite: DOWN 2.0 percent at 2,977.56 (close)

New York - Dow: UP 2.5 percent at 31,082.56 (close)

Pound/dollar: UP at $1.1303 from $1.1258 on Friday

Dollar/yen: UP at 149.37 yen from 147.65 yen

Euro/dollar: DOWN at $0.9822 from $0.9863

Euro/pound: DOWN at 86.88 pence from 87.26 pence

West Texas Intermediate: DOWN 1.1 percent at $84.14 per barrel

Brent North Sea crude: DOWN 0.8 percent at $92.80 per barrel

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