Global stocks and the pound climbed on Monday as markets reacted to the news that former finance minister Rishi Sunak would become Britain’s new prime minister.

European and American equities climbed despite data showing Britain and Germany headed for recession and a plunging Hong Kong stock market as Chinese President Xi Jinping handed key economic posts to loyalists behind his zero-Covid strategy.

Wall Street also opened in the green on Monday, with sentiment boosted by hopes the Federal Reserve would soon slow its pace of interest rate hikes.

News that European gas prices were at a four-month low also spurred traders, as the reference Dutch TTF dipped below 100 euros for the first time since June, reaching 98.60 euros per megawatt hour at around 1030 GMT on Monday.

All eyes were on Britain as Sunak was poised to become the country’s third prime minister in less than two months following the resignations of Boris Johnson and Liz Truss.

His last rival for leadership of the ruling Conservative party, Penny Mordaunt, dropped out of the race on Monday, clearing the way for Sunak to become prime minister after his failed bid earlier this year.

“The pound started the week trading higher as many see the new potential PM as a source of some stability, particularly when compared to the chaotic term served by the Truss government which saw massive volatility across markets,” noted XTB chief market analyst Walid Koudmani.

“Many see Sunak as the final chance for the Conservative Party as he has managed to maintain some credibility” compared with the uncertainty of the Truss and Johnson premierships, he added.

“Investors clearly hope Sunak will stabilise the economy and the political situation -- though it’s hard to work out at this point which is the harder task,” commented AJ Bell financial analyst Danni Hewson.

Yields on UK government bonds also dropped following recent surges in the wake of Truss’s disastrous budget that led to her downfall.

Focus was also on the euro after new Italian Prime Minister Giorgia Meloni took office.

Meloni’s post-fascist Brothers of Italy scored a historic victory in general elections on September 25.

Her new government is the most far-right in Italy since World War II, and takes power at a time of decades-high inflation and an energy crisis linked to Russia’s invasion of Ukraine.

Milan’s stock market was up 1.3 percent in early afternoon trading on Monday, mirroring strong gains in Frankfurt and Paris, while yields on Italian government bonds also fell.

London was up by 0.6 percent in mid-afternoon trading, but the stronger pound and falling oil and gas prices were weighing on the heavyweight energy sector, according to traders.

The eurozone was meanwhile looking ahead to Thursday when the European Central Bank is expected to announce another bumper rise in interest rates aimed at curbing sky-high prices.

On the corporate front, Dutch medical device manufacturer Philips announced it would axe 4,000 jobs after its recall of faulty sleep respirators pushed it into a loss.

Following the news, the group’s share price dropped 0.8 percent on the Amsterdam stock exchange on Monday.

Oil prices were steady on Monday after Chinese data showed that demand from the world’s largest crude importer remained lacklustre, but rising equities in key markets marked a brief respite from global recession fears.

Brent crude futures for December settlement were up 8 cents, or 0.1%, at $93.58 a barrel by 1356 GMT, after rising 2% last week. U.S. West Texas Intermediate crude for December delivery was at $85.03 a barrel, down 2 cents.

Although higher than in August, China’s September crude imports of 9.79 million barrels per day were 2% below a year earlier, customs data showed on Monday, as independent refiners curbed throughput amid thin margins and lacklustre demand.

“The recent recovery in oil imports faltered in September,” ANZ analysts said in a note, adding that independent refiners failed to utilise increased quotas as ongoing COVID-related lockdowns weighed on demand.

Uncertainty over China’s zero-COVID policy and property crisis are undermining the effectiveness of pro-growth measures, ING analysts said in a note, even though third-quarter gross domestic product growth beat expectations.

Main stock market indexes on Wall Street opened higher on Monday as Treasury yields eased on hopes of a less aggressive Federal Reserve, while stocks in the United Kingdom hit session highs as Rishi Sunak was set to become prime minister with a market-friendly fiscal programme.

Brent rose last week despite U.S. President Joe Biden announcing the sale of a remaining 15 million barrels of oil from the U.S. Strategic Petroleum Reserves, part of a record 180 million-barrel release that began in May.

Biden added that his aim would be to replenish stocks when U.S. crude is around $70 a barrel.

But bank Goldman Sachs said the stocks release was unlikely to have a large impact on prices.

Agencies