Global markets rebound as rate hike worries fade

World stock markets shot higher on Monday, bouncing back from last week's heavy selloff as worries about early interest rate hikes faded and US Treasury yields dropped, dealers said.

Global markets rebound as rate hike worries fade
A file photo taken on November 17, 2020 shows vials with Covid-19 Vaccine stickers attached and syringes with the logo of US pharmaceutical company Johnson & Johnson in London. The US Food and Drug Administration (FDA) on February 27, 2021 issued emergency use authorization for the Johnson & Johnson Covid-19 vaccine. AFP
Wall Street stocks snapped higher at the open and kept pushing up further, recovering much of the ground they lost at the end of last week.

The blue-chip Dow was up 2.1 percent in late morning trading, with the broader S&P 500 and tech-heavy Nasdaq Composite also gaining more than 2 percent.

In Europe, London, Frankfurt, and Paris all closed the day 1.6 percent higher.

Asian stocks rose strongly on bargain-buying as the passage of President Joe Biden's $1.9-trillion Covid relief stimulus through the US House of Representatives provided additional cheer.

While many Democrats are disappointed a $15 minimum wage can't be included in the package in the US Senate, "it does have the short term benefit of making the path to passing the American Rescue Plan that bit easier," noted Spreadex analyst Connor Campbell.

Oil prices climbed before this week's output meeting of the OPEC group of oil producers and their allies, while the dollar advanced versus the euro and yen.

"Equity markets have shaken off the negative sentiment that was doing the rounds last week as the pullback in government bond yields has seen buyers step into the fold," said analyst David Madden at online trading firm CMC Markets UK.

Stocks took a beating last week as government bond yields spiked higher, with investors worried that too much stimulus will spark inflation and push central banks into raising interest rates earlier than expected.

In a bid to calm markets, several central banks -- including in Japan, South Korea and the European Union -- sought over the weekend to reiterate their pledges to maintain their ultra-loose monetary policies for as long as needed.

Australia's led the way by ramping up its asset purchases to keep rates low.

"Traders feel more confident about snapping up relatively cheap stocks as they are less fearful that central banks will look to tighten their policy anytime soon," said Madden.

News that Johnson & Johnson's one-shot vaccine had been given the green light by US regulators -- paving the way for a quicker rollout of vaccinations -- added to the positive sentiment on Monday.

"Now that the US has three highly effective Covid vaccines, expectations for herd immunity at some point in the summer should release a lot of pent up buying power from the US consumer," said Oanda analyst Edward Moya.

He said this is renewing interest in stocks in smaller companies with investors betting that an early drop in restrictions will boost their fortunes.

Oil prices also rebounded with focus on the key meeting of the OPEC+ group of major producers on Thursday, when they will discuss the huge output cuts that have provided much-needed support to prices.

Russia is said to be keen to turn on the taps again but Saudi Arabia prefers to keep the status quo.

- Key figures around 1630 GMT -

New York - Dow: UP 2.1 percent at 31,585.13 points 

EURO STOXX 50: UP 1.9 percent at 3,705.49

London - FTSE 100: UP 1.6 percent at 6,588.53 (close)

Frankfurt - DAX 30: UP 1.6 percent at 14,012.82 (close)

Paris - CAC 40: UP 1.6 percent at 5,792.79 (close)

Tokyo - Nikkei 225: UP 2.4 percent at 29,663.50 (close)

Hong Kong - Hang Seng: UP 1.6 percent at 29,452.57 (close)

Shanghai - Composite: UP 1.2 percent at 3,551.40 (close)

Euro/dollar: DOWN at $1.2055 from $1.2075 at 2200 GMT

Pound/dollar: UP at $1.3949 from $1.3933 

Euro/pound: DOWN at 86.45 pence from 86.66 pence

Dollar/yen: UP at 106.63 yen from 106.57 yen

Brent North Sea crude: UP 0.9 percent at $64.97 per barrel

West Texas Intermediate: UP 0.6 percent at $61.87 per barrel

Topics: world stock markets , Joe Biden , COVID relief stimulus , American Rescue Plan
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