Commodities boost London markets as supermarkets slump

Market report

The FTSE 100 gained further ground as stronger oil and commodity prices helped London keep up its strong start to the week.

Positivity around the Covid-19 situation in China gave crude prices a lift, which subsequently moved BP and Shell shares higher.

This helped offset supermarket stocks, such as Tesco and Sainsbury’s, which drifted lower after Bank of England Governor Andrew Bailey warned of “apocalyptic” food price rises.

The FTSE 100 ended the day up 53.55 points, or 0.72%, at 7,518.35 points.

Brent crude increased by 0.64% to 114.52 US dollars per barrel when the London markets closed.

Chris Beauchamp, chief market analyst at IG, said: “The next short-term bounce looks well under way across stocks, as beaten-down names see fresh gains.

“But while it might be the beginning of a much longer-term rally, the persistence of fears about a recession and higher prices means that the chances are high that this oversold surge has a few weeks of life in it before we see stocks reverse course again.’’

Michael Hewson, chief market analyst at CMC Markets UK, said: “We’ve seen a much more positive vibe around European equity markets today, with reports out of Asia suggesting that China might be close to looking to ease some of its Covid restrictions, as case rates come down.’’

The German Dax increased by 1.3% , while the French Cac was also up 1.59%.

Across the Atlantic, the main US markets had a solid start to trading after April retail sales grew 0.9% and March’s figures were revised upwards.

Meanwhile, sterling moved marginally higher after the latest ONS labour figures showed wages over the three months to March jumped ahead of expectations.

The pound increased by 0.02% against the dollar to 1.247, and increased 0.02% against the euro to 1.183.

In company news, tobacco giant Imperial Brands rose despite reporting a big drop in profit as it took a hit from leaving Russia.

The company behind Golden Virginia and Rizla saw positivity among traders however due to strong sales of e-cigarettes and heated tobacco in Europe. Shares climbed by 135p to 1,847.5p at the close of trading as a result.

Contour Global shares took flight after private equity giant KKR agreed to buy the UK power generator, which owns dozens of coal, gas and renewables sites across the world.