The FTSE 100 jumped 1.3% as traders returned after the Platinum Jubilee long weekend, boosted by rising oil prices and strong Asian markets, while investors were unfazed by UK Prime Minister Boris Johnson facing a no confidence vote within his own party. 

The blue-chip index added 98 points to trade at 7,631 following the four-day weekend after Asian markets set a positive tone. China announced further easing of restrictions in Beijing and there was also hope that US officials could remove tariffs from Chinese imports to help reduce inflation.

Richard Hunter, head of markets at Interactive Investor, said the gradual lifting of Covid-19 restrictions in China has ‘led to hopes for a return of demand and consumer confidence, with authorities still poised to offer monetary assistance as and when required in an effort to help the economy make up for lost ground’.

The reopening of the Chinese economy helped push the price of a barrel of Brent crude past $120 a barrel, along with Saudi Arabia’s decision to increase prices for its crude sales next month despite the Opec oil cartel pledging to increase production 50% in July and August.

Oil major BP (BP) was up 2.8%, or 12p, at 443p, and peer Shell (SHEL) added 2.1%, or 51p, to trade at £24.12. Broader commodity stocks also benefited, with Endeavour Mining (EDV) up 3.9% at £18.75, Anglo American (AAL) up 2.8% at £39.60, Rio Tinto (RIO) up 3.8% at £59.22, and Antofagasta (ANTO) adding 2.7% to reach £15.35.

Prime Minister Boris is facing a no-confidence vote from Conservative MPs this evening, after the threshold to trigger one was passed following growing pressure over ‘partygate’ breaches of Covid-19 lockdown laws and policy failures.

While analysts identified little effect on shares, the UK government bond market is ‘selling off across the curve’, said Interactive’s Victoria Scholar, with 10-year, 20-year and 30-year yields hitting multi-year highs.

The 10-year yield climbed by 5 basis points to 2.2%, while the 5-year gilt yield jumped more dramatically by 6 points to 1.82%. 

‘If Johnson loses, sterling, which in part signals international investor confidence in the UK, could get a boost and reverse some of the recent negativity,’ said Scholar. 

Her colleague Hunter noted the FTSE 100 was now ahead 2.9% year-to-date.

‘Given the constituents of the index, the renewed strength of the oil price will have had an impact, but the gains were broadly based as the UK continues to be given serious consideration as the investment destination of choice in the current global environment,’ he said.

Melrose (MRO) was a major mover this morning, up 4% at 138p, after the engineering buyout specialist announced the sale of its Ergotron unit, which makes ergonomic desks and office equipment, for $650m.

The FTSE 250 also pushed 1.3% higher, adding 269 points to trade at 20,542. Dr Martens (DOCS) was the biggest riser, leaping 8.5%, or 22p, to 280p after analyst upgrades on the back of a strong update last week that already saw the shares soar 24%.

Analyst upgrades also helped boost shares in John Wood (WG), which was up 6.9%, or 15p, at 239p and consumer review platform Trustpilot (TRST) advanced 6.1%, or 5p, to 97p.

China trust bounce

China trusts continued to rally in response to the ending of the Shanghai lockdown. JPMorgan China Growth & Income (JGCI ) led the way, adding 7% to 394p after a 10% gain last week.

Other over-sold investment company sectors also made gains. Bellevue Healthcare (BBH ) advanced 3.6% to 154.8p and Henderson Smaller Companies (HSL ) added 2.6% to 934.6p.

Edinburgh Worldwide (EWI ) notched up 2.4% to 180.3p after half-year results showed the Baillie Gifford global small-cap fund lost 34.1% in the six months to 30 April. The board has been actively buying back shares to reduce their 16% discount to asset value, paying them from borrowings rather than sell growth stocks in which its managers remain confident.

But Schroder UK Public Private (SUPP ) fell 5.5% to 22.3p after writing off the £22.8m stake in Rutherford Health, the proton beam cancer therapy provider that has fallen into administration.