European stock markets rally on economic optimism

WATCH: European stocks end day on high as FTSE and DAX soars

European stock markets rose to fresh records on Monday amid hopes for economic recovery from the devastation of the coronavirus pandemic.

The FTSE 100 (^FTSE), which started the day on rollercoaster ride, ended 1.34% higher at a one-week high, while the CAC (^FCHI) jumped 2.08% higher.

The DAX (^GDAXI) soared 3.4%, reaching a new record high, after the German government announced plans to speed up its vaccination campaign. It plans to vaccinate as many as 10 million people a week from the end of March.

Traders shrugged off German industrial production falling 2.5% in January; economists had expected a 0.4% decline.

The positive sentiment across Europe came as the Bank of England (BOE) governor said there was a growing sense of economic optimism, but cautioned that life won’t return to pre-COVID normality.

Speaking at a Resolution Foundation event, Andrew Bailey said that his overall assessment of Britain’s economic outlook was "positive but with large doses of cautionary realism."

"My best guess is that we will see some persistence, not full persistence but not a full reversion to pre-COVID either.

"We will work more from home than we used to and shop more online because new habits will persist to some degree, and to the extent they unwind it will be over a period of time."

Carsten Brzeski of ING said: "Looking ahead, it currently looks unlikely that the cyclical swings in industrial production, construction and exports will save the entire economy again from falling into contraction in the first quarter.

"Even if the current picture is mixed. With production expectations in the manufacturing sector surging and order books still improving, the prospects of industrial production remain positive."

READ MORE: UK services sector confidence hits 12 month high after vaccine rollout success

Across the pond things were fairly mixed, with the S&P 500 (^GSPC) climbing 0.42% and the tech-heavy Nasdaq (^IXIC) dipping 0.84%. The Dow Jones (^DJI) was up 1.34% at the time Europe had closed.

It comes after the Senate approved the latest $1.9trn US stimulus programme over the weekend.

“The lack of market reaction to this suggests that for the most part this is already priced in,” said Michael Hewson of CMC Markets.

“The most striking part of the package is a means tested direct payment to most US individuals worth $1,400 per person, along with much more generous unemployment provisions.

“While all of this is welcome news for the prospects for a strong economic rebound, it also raises questions about how much further US long term yields can go, in terms of their current move higher. One thing seems certain, US long term yields look set to continue to rise with the 1.8% level on the US 10 year the next target, though we could see a pullback to 1.4% first.”

WATCH: Senate approves president Joe Biden's $1.9trn COVID relief package

Asian shares fell in the red on Monday as indexes failed to rise on hopes for a gradual global recovery after the economic relief package.

Japan's benchmark Nikkei 225 (^N225) fell 0.42% while South Korea's Kospi (^KS11) shed 1%.

Hong Kong's Hang Seng (^HSI) fell 1.97% and the Shanghai Composite (000001.SS) dipped 2.3%.

Brent crude oil (BZ=F) also climbed past $70 a barrel – its highest in 14-months – after a drone attacked Saudi Arabia's largest crude facility.

The storage tank that was targeted on Sunday at Ras Tanura in the country’s Gulf coast is the world’s largest crude terminal. It is capable of exporting roughly 6.5 million barrels a day, representing nearly 7% of oil demand.

The Saudi energy ministry confirmed there were no casualties or loss of property from the attacks.

It comes in addition to the agreed measures last week by OPEC and its allies to stem production.

WATCH: What UK government COVID-19 support is available?