Global stocks surged after US retail sales data suggested the world’s largest economy is not heading toward a recession.
The FTSE 100 jumped 1%, and Wall Street indexes gained up to 1.5% after figures indicated that American consumers are holding up well despite interest rates remaining at 23-year highs.
US retail sales rose by 1% in July to $709.7 billion (£553.2 billion), far exceeding economist estimates of 0.4% growth.
Bond yields moved higher as traders reduced bets on the Federal Reserve announcing a significant interest rate cut at its next meeting in September.
Money markets also show the chances of a rate cut by the Bank of England at its next meeting have dropped from 41% on Wednesday to 34%.
Billions were wiped off global markets in a massive sell-off last week amid fears of a US recession.
However, stocks have rebounded as separate data revealed a decline in the number of Americans applying for unemployment benefits last week.
The consultancy Capital Economics noted to clients: “Don’t bet against the American consumer.”
