What to Watch: Oil and gold rise, Ryanair loan, shorting bans lifted

Tom Belger
Finance and policy reporter
Gold prices have risen during the pandemic. (Uli Deck/picture alliance via Getty Images)

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Oil jumps but gold demand stays strong

Oil prices have reached their highest level in more than a month, as investors bet on higher global demand with more countries easing coronavirus lockdowns.

West Texas Intermediate prices, the US crude benchmark, briefly hit a two-month high in early trading on Monday, rising 5% past the $30 a barrel mark. Crude was trading at $30.91 at around 10am in London.

Brent crude was trading at $33.56 a barrel, up 3.3% on the previous day. The lift also pushed energy giants’ stocks higher, with Royal Dutch Shell (RDSB.L) up 4%.

Prices for oil futures contracts turned negative for the first time in history last month, as a collapse in global demand created a glut that threatened to overwhelm storage facilities.

READ MORE: European stocks rise on lockdown easing in several states

But greater easing of curbs on business and travel in many countries have seen expectations of demand edge higher. OPEC, Russia and others negotiated a record cut in output in April, taking pressure off prices.

Continued nervousness over national economies across the globe has also pushed up demand for gold to a seven-year high, however. With record low rates, record quarterly declines in GDP and mounting fears of slow and partial recovery, investors have flocked to the perceived ‘safe haven’ of bullion.

"Gold remains the best hedge against inflation which may be about to return, even if deflationary pressures are more pronounced right now," said Neil Wilson, chief analyst at Markets.com.

Ryanair stocks rise on $600m credit from UK loan scheme

A Ryanair plane as it revealed its latest results. (AP)

Budget airline Ryanair (RYA.L) stocks jumped more than 8% on Monday, as it confirmed it had raised £600m ($726m) in unsecured debt from the UK’s state-backed loan programme.

Ryanair chief financial officer Neil Sorahan also said there had been “a little bit of a pickup” in demand. “There’s definitely people starting to look at kind of August-September to get some sun before the kids go back to school.” 

Sorahan said accessing the UK government-backed state loan scheme was unlike state aid for some of its rivals that Ryanair has dubbed “illegal,” as the scheme is open to all firms.

The company said in its final results for 2021 its passenger numbers would halve over the next year, however.

Six European states lift shorting bans

Financial regulators have scrapped temporary curbs on short selling in several European countries introduced in the wake of the coronavirus crisis.

Watchdogs in six EU states had sought to rein in the freefall on stock markets in March through emergency curbs on attempts to profit from falls. EU regulations allow such bans on short-selling where necessary to prevent a “serious threat to financial stability or to market confidence.”

The European Securities and Markets Authority (ESMA) said on Monday the curbs on shorting specific stocks had not been renewed by authorities in France, Italy, Spain, Belgium, Austria and Greece.

Short selling or ‘shorting’ involves betting against a stock or bond, and can prove controversial, particularly in times of crisis. An investor borrows shares and sells them on in the expectation they can rebuy them at a lower price, keeping the difference when returning them to the lender.

AstraZeneca could make 30m vaccine doses if trials succeed

FTSE 100 drug giant AstraZeneca (AZN.L) is lined up to make as many as 30 million doses of a potential COVID-19 vaccine if ongoing trials prove the drug to be effective.

UK business secretary Alok Sharma said on Sunday that AstraZeneca would make up to 30 million doses of an Oxford University-developed drug by September. The drugs giant has agreed to make 100 million doses in total.

Details of the production partnership between AstraZeneca and Oxford University had previously been announced but Sunday marked the first time production goals had been shared. Shares in AstraZeneca rose 1.8% on Monday morning in London.

European stocks higher as lockdowns ease

European markets rose on Monday after their worst week since mid-March, with looser coronavirus restrictions boosting stocks.

The pan-European Stoxx 600 (^STOXX) index was trading 1.8% higher at around 8.30am in London. Britain’s FTSE 100 (^FTSE) and France’s CAC 40 (^FCHI) both jumped 2.1%, while in Germany the DAX (^GDAXI) was up 2.5%.

“Equities and oil are higher as investors cautiously welcome signs lockdowns are ending, but markets remain in this tug-of-war pattern where we simply don’t know whether the damage will be a lot worse than feared or the recovery will be much swifter,” said Neil Wilson, chief market analyst at Markets.com.

Stocks rose overnight in Asia too. Japan’s Nikkei (^N225), South Korea’s KOSPI (^KOSPI) and the Hang Seng index in Hong Kong (^HSI) all rose 0.5%. China’s Shanghai Composite (000001.SS) close 0.2% higher.

What to expect in the US

Futures were pointing to a rise on the open in the US later on Monday. S&P 500 futures (ES=F) and Dow Jones futures (YM=F) were both trading 1.5% higher and Nasdaq futures (NQ=F) were 1.4% higher at around 4am eastern time.

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