European shares jump and bond markets recover

European shares jumped on Monday and the bond market calmed, with yields dropping from their recent spikes, while optimism about U.S. fiscal stimulus sent oil prices higher. After Asian stocks rallied overnight, European share indexes opened higher, with the STOXX 600 up 1.7% at 0837 GMT. London’s FTSE 100 up 1.8% and Germany’s DAX was up 1.3%. The MSCI world equity index, which tracks shares in 49 countries, was up 0.5%, recovering from the previous session’s multi-week low.

The much-anticipated $1.9 trillion COVID-19 relief bill was passed in the U.S. House of Representatives on Saturday, and now moves to the Senate. In the bond market, key yields fell from their recent highs. The U.S. 10-year treasury yield was down around 4 basis points at 1.4118% at 0837 GMT, having dropped from Thursday’s one-year high of 1.614%. Germany’s benchmark 10-year Bund yield was down around 5 basis points, also below last week’s spike.

Market participants have become wary in recent weeks that, when economies re-open from their coronavirus lockdowns a combination of massive government stimulus and pent-up consumer demand will cause inflation to accelerate. Factory activity data for February is also in focus this week, with European PMIs due throughout the morning. Manufacturing in Japan grew at its fastest pace in more than two years in February, as strong orders led to the first output rise since the start of the pandemic.

European shares jump and bond markets recover; February PMIs in focus, Reuters, Mar 1