NEW YORK, July 7 ― Global stock markets rallied and China's yuan posted its biggest gain since December yesterday as investors bet the Chinese economy would boost global growth even as surging coronavirus cases delayed business re-openings across the United States.

Data showing unexpected growth in the US services sector last month, almost returning to its pre-pandemic levels, also helped drive Wall Street higher and lift Brent crude futures, the global benchmark for oil.

The Nasdaq set fresh all-time and closing highs, led by Amazon.com Inc as its shares crossed US$3,000 (RM12,833) for the first time. Tesla Inc jumped 13.5 per cent, up 228 per cent so far this year.

The yuan led commodity currencies higher against the dollar as investors lapped up risky assets on growing expectations of a strong economic rebound in China, where an index of blue-chip Chinese shares soared to a five-year high.

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A Chinese economic revival bodes well for Australia and Europe, which count Beijing as their biggest trading partner.

The euro advanced 0.55 per cent to US$1.1310 and European shares jumped. The broad FTSEurofirst 300 index added 1.53 per cent as stocks exposed to China ― carmakers, industrials, energy firms and luxury goods makers ― rose strongly. Banks also rallied.

The rally in Chinese stocks was the big catalyst, said Stephen Gallo, European head of FX strategy at BMO Financial Group. “The only caveat is that China's economy is not driven purely by free-market forces. But if regulators in China are engineering a stronger equity market, it can still feed through to the rest of the world.”

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China's offshore yuan was on track for its best day against the dollar since December 12, up 0.76 at 7.0150.

Chinese blue chips jumped 5.7 per cent on top of a 7 per cent gain last week to their highest since June 2015. Even Japan's Nikkei , which has lagged due to a soft domestic economy, rose 1.8 per cent.

MSCI's All-Country World Index, a gauge of equity performance in 49 countries, rose 1.8 per cent. Emerging markets jumped 2.59 per cent, their biggest single-day gain in three months.

On Wall Street, the Dow Jones Industrial Average rose 459.67 points, or 1.78 per cent, to 26,287.03. The S&P 500 gained 49.71 points, or 1.59 per cent, at 3,179.72, and the Nasdaq Composite added 226.02 points, or 2.21 per cent, at 10,433.65.

A slew of upbeat US data, including a record rise in June payrolls last week, has powered the Nasdaq to fresh all-time highs and lifted stock markets around the world on recovery hopes.

But a resurgence of US coronavirus cases has clouded the future. In the first five days of July, 16 US states reported record increases in new cases of Covid-19, the disease caused by the virus that has infected nearly 3 million Americans and killed more than 130,000, according to a Reuters tally.

US Treasury yields were higher yesterday as investors priced in auctions this week that will increase the supply of the low-risk debt.

The benchmark 10-year yield was up 0.1 basis points to yield 0.6808 per cent. German 10-year yields traded at -0.469 per cent.

Oil rose slightly on the US service sector data, while a spike in coronavirus cases that could curb fuel demand in the United States limited gains.

Brent crude settled up 30 cents at US$43.10 a barrel, while US West Texas Intermediate crude fell 2 cents to settle at US$40.63.

Gold edged toward an almost eight-year high hit last week as the spike in coronavirus cases kept safety demand elevated, though the rally in equities and the strong US services sector data limited the metal's advance.

US gold futures settled up 0.2 per cent at US$1,793.50 per ounce. ― Reuters