European and US stock markets mostly pushed higher Monday on optimism that a massive fiscal package in the United States is heading towards enactment, while oil prices briefly surged above $71 per barrel following an attack on Saudi oil facilities.
After Asian indices closed mostly lower, with sharp losses in Hong Kong and Shanghai, Europe pushed higher, and then gains accelerated after Wall Street opened, although the tech-heavy Nasdaq turned lower in late morning trading.
Frankfurt's blue-chip DAX 30 index rose more than 3.4 percent in Monday afternoon trade to hit a new record of 14,402.92 points, with a 6.5 percent jump in shares in long-suffering Deutsche Bank helping after the lender announced a share buyback of 1 billion euros and a resumption of dividend payments.
Wall Street had already surged Friday following news that the US economy created 379,000 jobs in February, reaffirming the view that it is on track for a strong recovery.
Then over the weekend senators passed Joe Biden's $1.9 trillion rescue plan, setting it up for the US president's signature by the end of the week.
"The Dow is closing on a 1,200 point gain from Thursday’s lows, supercharged by hopes that Friday’s headline improvement in the jobs numbers marks a turning point for the US economy’s battle with Covid, and on expectations that the stimulus bill will help accelerate this process," said Chris Beauchamp, chief market analyst at online trading firm IG.
In another sign that the world economy is getting back on track, China at the weekend released data showing a better-than-expected jump in exports in January and February, suggesting global trade is revving up again after being hammered by the coronavirus pandemic.
Oil prices shoot higher
Benchmark oil contract Brent North Sea crude, which has been rising strongly on rebounding demand, broke Monday past $70 per barrel for the first time since January 2020 after an attack on energy facilities in Saudi Arabia.
Brent peaked at $71.38 -- the highest level since January 2020 -- before falling back under $70 per barrel.
The strike on the Aramco facilities -- including one of the world's biggest oil ports -- by Yemen's Huthi rebels Sunday followed the bombing of the country's capital Sanaa by a Saudi-led military coalition.
The rising hostilities underscore a dangerous intensification of Yemen's conflict between the coalition-backed Yemeni government and the Iran-backed Huthis, despite a renewed US push to end the war in the crude-rich region.
"It would appear that the realisation that there doesn’t appear to have been any damage inflicted on any production infrastructure, has seen prices slip back," said analyst Michael Hewson at CMC Markets UK.
While surging oil prices boosted share prices across the heavyweight energy sector, they "will only add to the key concern which is dogging (stock) markets -- namely the risk of runaway inflation and a resulting increase in interest rates", noted AJ Bell investment director Russ Mould.
A surge to inflation could force the Federal Reserve and other central banks to wind back the ultra-loose monetary policies that have been a key driver of a year-long equity market rally, according to analysts.
Equity markets have swooned in recent weeks on inflation fears as benchmark US 10-year Treasury bond yields have risen.
Yields rise as bond prices fall, and investors have been rushing out of them as inflation would eat into their returns over time, sparking a selloff in world markets.
Key figures around 1630 GMT
New York - Dow: UP 1.5 percent at 31,967.40 points
EURO STOXX 50: UP 2.6 percent at 3,763.49
London - FTSE 100: UP 1.3 percent at 6,719.13 (close)
Frankfurt - DAX 30: UP 3.3 percent at 14,380.91 (record close)
Paris - CAC 40: UP 2.1 percent at 5,902.99 (close)
Tokyo - Nikkei 225: DOWN 0.4 percent at 28,743.25 (close)
Hong Kong - Hang Seng: DOWN 1.9 percent at 28,540.83 (close)
Shanghai - Composite: DOWN 2.3 percent at 3,421.41 (close)
Euro/dollar: DOWN at $1.1861 from $1.1919 at 2145 GMT
Pound/dollar: DOWN at $1.3817 from $1.3841
Euro/pound: DOWN at 85.83 pence from 86.08 pence
Dollar/yen: UP at 108.84 yen from 108.36 yen
Brent North Sea crude: DOWN 0.7 percent at $68.90 per barrel
West Texas Intermediate: DOWN 0.7 percent at $65.62