Wall Street rises on US stimulus and vaccine hopes as bond markets calm

Global equities rose and the S&P 500 on Monday was headed for its best day since June 5, with investors taking lower US bond yields in stride as a sweeping $1.9 trillion US coronavirus relief bill and distribution of Johnson & Johnson's newly authorized Covid-19 vaccine spurred enthusiasm.

Wall Street's rise follows a jump in European shares and solid gains in Asian stock markets.

Investor optimism about further economic recovery because of the J&J vaccine is "giving a lift to all of the 'go-to-work' stocks" that benefit from businesses reopening, said Jim Awad, senior managing director at Clearstead Advisors in New York.

A stabilization of US Treasury yields has also removed pressure from growth stocks, Awad said.

The Dow Jones Industrial Average rose 734.17 points, or 2.37 per cent, to 31,666.54, the S&P 500 gained 103.1 points, or 2.71 per cent, to 3,914.25 and the Nasdaq Composite added 399.59 points, or 3.03 per cent, to 13,591.94.

The much-anticipated $1.9 trillion Covid-19 relief bill was passed in the US House of Representatives on Saturday, and now moves to the Senate.

The pan-European STOXX 600 index rose 1.84 per cent and MSCI's gauge of stocks across the globe gained 2.21 per cent.

Emerging market stocks rose 1.86 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.88 per cent higher, while Japan's Nikkei rose 2.41 per cent.

US manufacturing activity increased to a three-year high in February amid a surge in new orders, but factories continued to face higher costs for raw materials and other inputs as the pandemic drags on.

Major sovereign bonds rallied on Monday as markets showed further signs of stabilization after their worst monthly performance in years.

Expectations of economic recovery and rising inflation boosted global benchmark bond yields in February to their biggest monthly rises in years. But in the meantime, the expected run-down of US Treasury balances at the US Federal Reserve has held down shorter-dated rates.

Benchmark 10-year Treasury notes last rose 5/32 in price to yield 1.441 per cent, from 1.456 per cent on Monday.

The coronavirus pandemic laid bare weaknesses in the financial system that should be addressed with new rules to prepare for the next shock, Fed Governor Lael Brainard said on Monday.

"We should not miss the opportunity to distill lessons from the Covid shock and institute reforms so our system is more resilient and better able to withstand a variety of possible shocks in the future," Brainard said.

Gold prices rose on Monday as a retreat in US Treasury yields helped to bolster its status as an inflation hedge after a US stimulus package moved one step closer to becoming law, but a firmer dollar limited bullion's advance.

Spot gold dropped 0.5 per cent to $1,724.46 an ounce. US gold futures fell 0.28 per cent to $1,723.30 an ounce.

PMI data for February is also in focus this week. Germany's factory activity rose to its highest level in more than three years last month, driven by higher demand from China, the United States and Europe.

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.

China's factory activity grew at a slower pace than in the previous month, missing market expectations.

US crude recently fell 1.59 per cent to $60.52 per barrel and Brent was at $63.63, down 1.23 per cent on the day.

The dollar index rose to a three-week high on Monday as investors bet on faster growth and inflation in the United States, while the Australian dollar gained after Australia's central bank increased its bond purchases in a bid to stem rapidly rising yields.

Bitcoin rose 5.94 per cent to $48,373.13 but was still off a record high of $58,354.14 hit on Feb. 21.