Stocks and oil are rallying this afternoon, as both benefit from a more optimistic outlook on the global economy.

  • European shares lead the way higher
  • China & US PMIs point to continued recovery
  • Oil stages a sharp rebound

It has been a solid day for European equities, and US markets are moving higher as well, helped along by better PMIs from China and the US. Earnings season has seen a healthy majority of companies beat forecasts, with the fears of Armageddon proved unfounded once more. Now that big tech names are mostly out the way, the Nasdaq has found the strength to rally, and looks poised to continue its long-term rally having essentially struggled to make much headway for July. European markets have had a particularly good session, and once again earnings have been the driver of the recovery, putting the Dax and other indices on the front foot as the traditionally-choppy month of August gets underway. Whether stocks on both sides of the Atlantic can continue to deliver as the flow of corporate news dries up remains to be seen.

Investors are clearing shifting back to a more optimistic view on the global economy, and the rebound in oil provides proof of this. The commodity struggled at the end of last week with some sharp losses, but if economic data continues to point to an ongoing rebound then the demand side of things is bound to pick up. Then it will be up to producer nations to maintain their discipline and avoid increasing production too rapidly, lest they end up smothering the rally with another bout of overproduction similar to that seen earlier in the year.

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