World stock markets rallied strongly on Tuesday after the US Federal Reserve launched an unprecedented bond-buying plan, the latest salvo in a global counter-attack against fallout from the coronavirus outbreak. Oil jumped 3% on Tuesday towards $28 a barrel, supported by steps by the U.S. Federal Reserve to bolster the economy and hopes the United States will soon reach a deal on a $2 trillion coronavirus aid package.

The Fed on Monday rolled out an array of programmes including backing for the first time corporate bond purchases. U.S. Treasury Secretary Steven Mnuchin voiced confidence that a deal on the aid package would be reached soon.

European equities charged higher as investors shrugged off grim survey data showing collapsing eurozone and UK business activity in March, followed by Wall Street which also surged at the opening bell in New York.

The dollar beat a retreat from Monday’s three-year peak against the euro on the Fed news.

London stocks won more support after Britain became the latest western nation to implement a nationwide lockdown to help curb the spread of COVID-19.

“Stock markets in Europe are higher... as traders picked up the bullish baton from the indices in Asia,” said CMC Markets UK analyst David Madden, who also noted that traders had been expecting the “brutal” survey data.

“Political fighting in the US has prevented a stimulus scheme from being revealed earlier, but dealers are optimistic nonetheless,” he added.

US senators remain gridlocked, with Democrats on Monday again blocking a nearly $2 trillion rescue package for the economy.

While much of the planet goes into lockdown, traders gave a massive thumbs up to the US central bank’s pledge to essentially print money in a move not seen since the global financial crisis.

Gold rose 2% on Tuesday, extending gains from a near 4% surge in the previous session, after the US Federal Reserve’s unprecedented measures to help an economy reeling from the coronavirus pandemic halted a rush for cash. Spot gold rose 1.3% to $1,572.45 per ounce by 0637 GMT. The metal rose 3.7% on Monday, its highest percentage gain since June 2016. US Gold futures climbed 1.9% to $1,596.70. “Gold is surging higher after the Fed went above and beyond in unveiling measures to support the economy,” said Edward Moya, a senior market analyst at broker OANDA.

The Fed, which has already slashed interest rates to record lows, said it will buy unlimited amounts of Treasury debt and take steps to lend directly to small- and medium-sized firms hammered by restrictions across the country.

Earlier Tuesday, equities in Asia rallied with Tokyo ending more than seven per cent higher.

The Nikkei was given extra lift by a Bank of Japan decision to embark on its own massive bond-buying scheme. AxiCorp’s Stephen Innes called the Fed’s move “the most significant monetary experiment in the history of financial markets”.

“Asian investors like what they see from an all-in Fed, which is being viewed in a very impressive light for both Main and Wall Street, even as the US congress dithers.” The weaker dollar also helped lift crude, which has been hammered to recent multi-year lows on the back of a price war between producers Saudi Arabia and Russia.

“Oil is only rallying because the Fed’s unprecedented measures finally stopped the stronger dollar,” said OANDA analyst Edward Moya.

“Crude prices will have wild swings, but no one is expecting the bottom to be already in place.” Indian shares closed 3% higher on Tuesday after the country’s finance minister said the government would announce an economic stimulus package soon to help battle the impact of the rapidly spreading coronavirus.

Sentiment was also boosted by the US Federal Reserve’s move to roll out an unprecedented array of measures on Monday to help the world’s largest economy fight the pandemic.

The NSE Nifty 50 index closed 2.51% higher at 7,801.05, while the S&P BSE Sensex settled 2.67% higher at 26,674.34.

Both the indexes rose slightly over 5% after Finance Minister Nirmala Sitharaman promised an economic package and an extension of some tax filing deadlines on a video conference with reporters on Tuesday.

“Market came off its highs... on the fact that the economic package was still in development,” said Vinod Nair, head of research at Geojit Financial Services.

Sitharaman did not give details on when the country would announce the package, but said there was “no intention of delaying such announcements.” Indian stocks have tumbled more than 30% so far in March, with major indexes suffering their worst single-day fall in history on Monday.

Agencies