UK Markets closed

Global stocks climb as OECD lifts growth forecasts

Nurse Megan Williams administers a dose of the Pfizer vaccine against the coronavirus disease (COVID-19) to Lestine Washington, 59, at Richmond raceway in Richmond, Virginia, U.S., March 4, 2021. REUTERS/Julia Rendleman
The OECD raised its economic forecasts across the board, citing vaccine rollout success and adding that US president Joe Biden's huge $1.9trn stimulus package was expected to add a whole percentage point to global growth. Photo: REUTERS/Julia Rendleman

European equities rose on Tuesday as the Organisation for Economic Cooperation and Development (OECD) upgraded its growth forecasts for the UK and the global economy.

After a late rally on Monday, the FTSE 100 (^FTSE) closed 0.3%, retreating slightly from earlier in the day, while the CAC (^FCHI) edged 0.43% higher and the DAX (^GDAXI) was 0.55% up.

The OECD cited the rapid rollout of COVID-19 vaccines for the UK upgrade, but chided the EU for the slow pace of its inoculation campaign.

It now expects the UK economy to grow by 5.1% this year and 4.7% in 2022. At its last update in December, the OECD had forecast UK GDP growth of 4.2% in 2021 and 4.1% in 2022.

The OECD also raised its economic forecasts across the board, saying US president Joe Biden's huge $1.9trn (£1.37tn) stimulus package was expected to add a whole percentage point to global growth. The OECD now expects world GDP to expand by 5.6% this year — a huge upgrade from its previous forecast of 4.2%.

"Activity in many sectors has picked up and adapted to pandemic restrictions over recent months," it said. "Vaccine deployment, although uneven, is finally gaining momentum and government fiscal stimulus, particularly in the US, is likely to provide a major boost to economy activity."

READ MORE: OECD sounds alarm on EU's slow vaccine rollout as UK outlook improves

In London, mining stocks dragged the index as commodity prices suffered from a the stronger US dollar. Iron ore prices also weakened after anti-pollution restrictions were introduced in China’s top steelmaking city of Tangshan.

Watch: What is inflation and why is it important?

Across the pond, the S&P 500 (^GSPC) was 1.84% higher as Europe closed and the tech-heavy Nasdaq (^IXIC) soared 3.43%. The Dow Jones (^DJI) edged 0.84% up.

"US 10-year yields have softened a little overnight, which could offer a brief respite in the short term for the Nasdaq, as well as markets in general," said Michael Hewson of CMC Markets. "However any rebound in the Nasdaq from here could be used as an opportunity to sell into, in anticipation of further declines, if yields continue to head higher.

On Monday, Americans were told that those who have been vaccinated against COVID-19 can now visit the homes of other vaccinated people, or even unvaccinated people who are at low risk of serious disease. This was according to new guidelines from the US public health authorities.

Watch: European stocks mixed

Asian stocks mainly recovered from earlier losses on Tuesday, lifted by firmer US equity futures and central bank comments aimed at soothing fears about rising bond yields and inflation.

Japan's Nikkei (^N225) rallied 0.99%, while MSCI's broadest index of Asia-Pacific shares outside Japan advanced.

Chinese blue chips were mixed overnight after earlier hitting their lowest level this year. The Hang Seng (^HSI) rose 0.46% while the Shanghai Composite (000001.SS) dipped 1.82%.

Oil prices fell back sharply after the initial rise yesterday following the missile and drone attack on Saudi Arabia’s energy facilities over the weekend.

Saudi said that oil production in the Kingdom had not been affected and that the distribution from the Ras Tanura area had continued as of Monday evening.

The attack that was claimed by Iran-backed Houthi fighters in Yemen sent Brent crude (BZ=F) up to over $71 (£51) per barrel briefly before retreating.

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