Global markets bounce back from last week's slump

LONDON — World stock markets rebounded on Monday from last week's heavy selloff, as falling US Treasury yields soothed inflation concerns, dealers said.

Wall Street stocks snapped higher at the open, with the Dow gaining 1.4 per cent. The broader S&P 500 climbed 1.5 per cent and tech-heavy Nasdaq Composite shot 1.7 per cent higher.

London equities jumped 1.2 per cent in afternoon trade, while Frankfurt was up 1 per cent and Paris added 1.3 per cent.

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

Oil prices climbed before this week's output meeting of the cartel of the Organisation of the Petroleum Exporting Countries (OPEC) and their allies, while the dollar advanced versus the euro and yen.

"Equity markets are showing strong gains as bond yields cool," said analyst David Madden at online trading firm CMC Markets UK.

"Stocks came under pressure last week as a spike in government bond yields encouraged traders to trim their exposure to equity markets. 

"The prospect of higher inflation on the horizon has not disappeared but the fear of a higher cost of living is not having the same impact that it once had."

Markets tumbled last week on fears that the recovering global economy, in tandem with vast US stimulus, could fuel inflationary pressures and spark interest rate hikes in the long run.

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.

"It's a cookie-cutter rally effort in many respects," said analyst Patrick O'Hare at Briefing.com, with stocks having slumped last week as investors headed for the exits as yields shot higher.

"This week, then, will start with an act of contrition as investors are feeling penitent for leaving the stock market," he added.

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.

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.