The FTSE 100 has joined the relief rally sweeping global markets, which have been buoyed by signs of a deceleration in US inflation and an easing of the Covid-19 situation in China.

The blue-chip index started the week up 0.3%, or 23 points, at 7,609 as Wall Street tech stocks were lifted by hopes of slowing inflation in the US. The US Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures index, was up just 0.2% in April – marking its smallest monthly gain since November 2020.

‘The reaction of bond yields subsequently suggested that inflation could be near or even at its peak, which would remove a major thorn in the side for investors,’ said Richard Hunter, head of markets at Interactive Investor.

‘At the same time, data showing an increasing in consumer spending in April suggested that there is still life in a measure which accounts for almost 70% of US economic activity. Coupled with the potential inflation plateau, this could mean that stagflation can be avoided even through the Fed has not yet come to the end of its tightening cycle.’

Asian markets added to the positive momentum, climbing as China began to ease lockdown restrictions in Beijing and Shanghai and the government said it would enact measures to boost the beleaguered economy. The reopening of major cities in China pushed oil higher, with a barrel of Brent crude topping $120.

The biggest riser on the FTSE was JD Sports (JD), regaining some of the losses seen on Friday as it announced the sudden departure of founder Peter Cowgill. The shares tumbled 8% last week as investors were concerned by speculation that Cowgill had been outset amid an ongoing review of its internal governance and controls, but were up 4.4%, or 5p, at 125p this morning.

Scottish Mortgage (SMT ) was lifted by strong US tech stocks, with the investment trust up 3.1%, or 25p, at 820p.

International Consolidated Airlines (IAG) was up 3.1%, or 4p, at 143p despite shareholder disgruntlement over plans to hike chief executive Luis Gallego’s share awards even after the airline suffering huge losses during the pandemic. IAG, the owner of British Airways, also made it into the news this morning due to rumours it plans to cut pilots’ pay despite the airline now returning to profitability.

The FTSE 250 jumped 1%, or 217 points, to 20,590, led higher by Countryside Partnerships (CSP), which saw its shares soar by almost a quarter on a takeover approach. The housebuilder jumped 24%, or 58p, to 296p after existing stakeholder Inclusive Capital Partners made a confidential approach for the group about a possible offer worth 295p per share. However, Countryside has failed to engage with the bidder or provide any due diligence materials.

Watches of Switzerland (WOSG) was up 5.3%, or 50p, at 999p and Aston Martin (AML) added 4.9%, or 33p, to reach 717p.

BEMO shines

In other investment trust news, Barings Emerging EMEA Opportunities (BEMO ) rallied 4.4% to 569p on a 16% discount after half-year results showed the impact of Russia sanctions and the war in Ukraine, but also the benefit of its exposure to Saudi Arabia and South Africa. Net asset value slid 22.4% in the six months to 31 March.

The rebound in growth stocks lifted Baillie Gifford US Growth (USA ) 4.6% to 174p and private equity fund HgCapital (HGT ) 3.7% at 404p. Chrysalis (CHRY ), the pre-flotation growth capital fund, added a further 5.8% to 137.7p following last week’s portfolio update.