Europe midday: Shares higher on easing of Shanghai Covid curbs
European stocks were higher at midday on Monday on the back of news that Covid restrictions in Shanghai would be lifted on Wednesday and a potential £1.47bn bid for UK house builder Countryside Partnerships.
The pan-European Stoxx 600 was up 0.76%, with all major European bourses higher.
Markets in the US are closed Monday for the Memorial Day holiday, after the S&P 500 and the Dow Jones Industrial Average on Friday snapped losing streaks to post their strongest week since November 2020.
Asia-Pacific rose sharply as sentiment was boosted by a relaxation of Covid controls over the weekend in the major Chinese cities of Beijing and Shanghai.
"Retail sales in China fell off a cliff in April, down by more than 11% year on year so the re-opening of shopping malls in Beijing is also being taken as a sign of a brighter spell to come particularly for luxury goods sales," said Hargreaves Lansdown analyst Susannah Streeter.
"Signs that China is becoming a little more tolerant to covid infection rates has helped lift the share prices of luxury goods companies, with Burberry up 1.5%, LVMH rising 3.2% and Hermes International up by more than 4%."
"The covid case load in China has been a source of weakness for companies selling high end products given that the market is still considered to be the growth engine of the sector, but now there are high hopes big spenders will be flocking back to boutiques to get their hands on coveted brands."
Oil prices were also higher, with Brent crude trading around $115 dollars a barrel, as European Union leaders were set to meet to discuss a sixth package of sanctions against Russia over its invasion of Ukraine.
“This week price action is likely to be more bullish amid risk-on sentiment lifting equities and cryptos and amid concerns about inadequate supply driven by OPEC+ and the next package of EU sanctions,” said Interactive Investor head of investment Victoria Scholar.
“The softer US dollar is also helping to support the market, which after a strong uptrend has taken a pause for breath, making oil less expensive for importers. At least for now, concerns about slowing demand are taking a back seat particularly as we head into peak US driving season.”
In equity news, shares in Countryside soared after San Francisco-based Inclusive Capital on Monday said it was looking to make a £1.47bn bid, but accused the company of refusing to engage with it.
In-Cap, which holds a 9.2% stake in Countryside, said the possible offer was to buy the remaining shares in the house builder it does not already own for 295 pence each.
Allfunds Group also made strong gains, with the stock up 11%.