After several weeks of investors asking, ‘will it, or won’t it?’ about China relaxing its Covid restrictions, the balance of opinion seems to be positive at the start of the new trading week.
Asian stocks were off to the races including a 4.5% jump in the Hang Seng index.
Russ Mould, investment director at AJ Bell, said: “China easing the rules should pave the way to a reopening of its economy after several years of disruption. Naturally that would bode well for commodities demand and hence why Brent Crude oil prices nudged up 0.6% to $86.07 per barrel on Monday.
“Oil prices had been slipping in general since June amid concerns about a global economic slowdown, yet they seem to have found a floor around the $84 per barrel level, having twice bounced from this level in recent months.
“Many investors holding stocks in the oil and gas sector will have had a fortuitous year thanks to the surge in prices in the first half of 2022, with Brent rising from $78 to a peak of $127. However, it’s not been a one-way ticket to riches as these stocks have seen as many ups and downs as a rollercoaster at Alton Towers.
“Serica Energy has certainly had investors reaching for the sick bag after nearly doubling in value in early 2022, only to lose most of those gains before repeating the cycle again. It’s now testing the true loyalty of its backers with a disappointing drilling update.
“The opposite can be said for Wentworth Resources whose shares rocketed on a takeover approach from project partner M&P.
“The FTSE 100 was flat on Monday as strength among miners was offset by weakness in consumer goods and pharmaceutical stocks. This week’s UK corporate reporting calendar is dominated by smaller companies, although a trading update from Berkeley will shed the latest light on the state of the housing market and Thursday sees an update from British American Tobacco which is not expected to contain any surprises.”
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