Market movers: fresh China curbs, ECB rates, oil, house prices, Tate & Lyle

Victoria Scholar, interactive investor's head of investment, runs through today's big stories and how financial markets are reacting. 

EUROPEAN MARKETS

European markets are under pressure, with the mining sector leading the declines after China imposed fresh Covid curbs, sending shares in Shanghai and Hong Kong lower and with negative momentum carrying forward to Europe.

There is also a sense of nervousness ahead of the European Central Bank's (ECB) interest rate decision later today as the central bank looks to usher in a new era of monetary policy tightening. With euro area inflation hitting a record high in May, the ECB is widely anticipated to begin hiking rates in July with the deposit rate expected to be lifted from below zero in the third quarter.

OIL

Oil prices are under pressure after fresh lockdown measures were imposed in Shanghai as part of Beijing’s draconian zero-tolerance approach to Covid. Although the world’s second-largest economy had been starting to ease some of its Covid restrictions lately, this switch to ramping up measures once again has sparked nervousness about the potential for softer demand, pushing Chinese equities and oil prices into the red.

However, both Brent crude and WTI closed yesterday at their highest levels since March, equalling highs not seen since 2008 with a possible extension of recent gains if supply uncertainty lingers and China relaxes its curbs again. 

UK RICS HOUSE PRICES

• Royal Institution of Chartered Surveyors said its new buyers gauge dropped to -7 in May from +8 in April, the first negative reading in nine months
• There was a +73 percentage point difference between those reporting rising prices versus falling prices, missing analysts’ expectations and declining from +80 last month

The data confirms yesterday’s report from Halifax suggesting that, although the housing market remains extremely strong with demand sharply outstripping a severe supply shortage, there are tentative signs that it could be approaching its peak. The UK housing market looks set to soften in the months ahead as a stagnating UK economy, the cost-of-living crisis, near double-digit inflation and rising interest rates dampen residential activity.

TATE & LYLE FULL YEAR

• Adjusted revenues from continuing operations up 18% y-o-y to £1.37 billion
• Pre-tax profits from continuing operations up 14% to £145 million
• Completed the acquisition of prebiotic dietary fibre business Quantum Hi-Tech

Shares in Tate & Lyle (LSE:TATE) have caught a bid thanks to a strong full-year performance which saw the company enjoy double-digit organic revenue growth across all regions. The sweetener maker has managed to successfully navigate the inflationary environment by increasing prices without denting demand.

Shares are also boosted by the completion of its acquisition of Quantum Hi-Tech, a deal that highlights the importance of health-conscious food and drink options as a critical and expanding market for Tate & Lyle as it aims to diversify away from some of its more traditional brands.