China’s move to relax Covid travel rule sees FTSE 100 make gains

A sign that things are moving in the right direction

Commodity and defence firms led the gains as the FTSE 100 pushed higher for the third consecutive day.

Sentiment was supported by China’s decision to reduce the length of mandatory quarantine for inbound travellers, in the biggest relaxation so far in its zero Covid policy.

London’s oil majors had strong sessions amid hopes the relaxation will boost travel and trade.

“Even though the country still has measures in place, the move is interpreted as a sign that things are moving in the right direction, which has lifted sentiment across the board as stocks, oils and industrial metals are higher,” said David Madden, market analyst at Equiti Capital.

The FTSE 100 ended the day up 65.09 points, or 0.9%, at 7,323.41.

Traders were also positive elsewhere in Europe, as positivity around China helped the German Dax increase by 0.35% by the end of the session, while the French Cac lifted by 0.68%

In the US, there was a more downbeat tone as new data showed the sharpest rise in US consumer prices for more than four decades.

Sterling made slight gains as the US dollar stalled due to the unsettled economic backdrop.

The pound was up 0.03% against the dollar at 1.220 and was down 0.13% against the euro at 1.158.

The price of oil continued its latest rebound on the back of relaxed rules in China and agreements by the G7 leaders to work together on a price cap for Russian oil.

Brent crude increased by 1.94% to 117.32 US dollars per barrel when the London markets closed.

The biggest risers in the FTSE 100 were Rollsroyce, up 5.33p at 87.14p, Prudential, up 43.5p at 1,052.5p, BT, up 7.35p at 192.3p, BAE Systems, up 28p at 826.6p and Harbour Energy, up 11.9p at 375p.

The biggest fallers of the day were Severn Trent, down 111p at 2,742p, Aveva Group, down 70p at 2,379p, Flutter Entertainment, down 224p at 8,506p, Entain, down 31.5p at 1,304p and Halma, down 40p at 1,996p.