Stocks in Europe flirted with one-year highs, on Tuesday, buoyed by hopes that rollout of the COVID-19 vaccine and a huge US stimulus package will enhance durable economic recovery.

Oil prices jumped to a 13-month high as a deep freeze due to a severe snowstorm in the United States boosted power demand and threatened oil production in Texas.

Bitcoin was trading at $49,072.84 in Europe, after hitting a new record high of $60 shy of $50,000 earlier in the day.

The pan-European STOXX 600 was up 0.19 percent, after hitting its highest on Monday since late February 2020.

“The big picture is that there is an awful lot of enthusiasm for recovery when it comes to the vaccine programme,” said Michael Hewson, Chief Market Analyst CMC Markets.

The prospects for economic recovery lit up commodities, with copper at $8,384.50, after hitting its highest since May 2012.

The European mining index was at its highest level since July 2011.

Hospitality stocks could see more gains as restaurants, hotels and pubs reopen in the coming weeks.

They should do well on the back of the “staycation” trade, Hewson said.

EU fourth-quarter GDP figures and Germany’s Zew economic sentiment data were due on Tuesday.

But Hewson said most investors were ignoring numbers on past economic performance, opting to look ahead to recovery on the back of an easing of lockdown restrictions going into the summer.

“Markets started the week in a risk-on mood, in light of positive news relating to vaccine rollout.

Risky assets continued to rise, with stocks performing well in Europe,” UniCredit analysts said in a note.

The euro crept 0.2 percent higher to $1.2149. On Wall Street, S&P500 futures were up 0.46 percent.

US 10-year Treasury yields touched 1.25 percent for the first in almost a year. The US dollar at 90.229 was mired at a three-week low as growing optimism about recovery sent investors into riskier currencies, including the euro and British pound.

US President Joe Biden is pushing ahead with his plan to pump an extra $1.9 trillion in stimulus into the economy, in a further boost to market sentiment.

Market sentiment in Europe was helped by gains overnight in Asian shares, with Japan’s Nikkei blue-chip index up 1.28 percent at a 30-year high.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.44 percent.

In Hong Kong, the Hang Seng Index rose 1.9 percent to hit a 32-month high, while Australia’s S&P/ASX200 gained 0.7 percent. Mainland Chinese markets will remain closed for the holidays until Thursday.

Ord Minnett advisor, John Milroy, said while share markets were positive, investors were becoming wary of the future risk of inflation due to central bank and government stimulus programmes in place around the world.

“There is a clear sense with rates staying low for some time yet and investor appetite for equities staying strong we will likely see markets hold up for some time yet,” Milroy told Reuters.

The bullish view on the economy lifted bond yields, with the 10-year US treasuries gaining to 1.23 percent, their highest since late March.

Investors are looking to the minutes from the US Federal Reserve’s January meeting, due to be published on Wednesday, to confirm its commitment to maintaining its dovish policy stance over the near future.

That, in turn, is set to keep a tab on bond yields. Brent crude was flat at $63.28 a barrel, after rising to its highest since January 2020 in the previous session.

US West Texas Intermediate (WTI) crude futures gained 60 cents, or 0.7 percent, to $59.89 a barrel. 

(Reuters/NAN)