Increasing confidence that the worst of the credit crisis is over boosted world stocks on Monday while inflation concerns grew with oil prices heading towards a barrel. Investors have stopped taking it for granted the United States Federal Reserve will cut interest rates later in the week, although most still expect such a move.
Signs of life in the United States housing market combined with JPMorgan’s higher bid for Bear Stearns to push global equity markets up sharply on Tuesday, and sent corporate debt demand soaring. The dollar remained weak, however, while eurozone government bond prices took a hefty hit as equities rose.