Stock markets continued to edge higher on Tuesday, as investors drew confidence from the prospect of economic normalisation and the rollout of Covid-19 vaccines.

The FTSE All-World index climbed 0.1 per cent to take the global benchmark to a fresh intraday peak, while futures trading pointed to Wall Street’s S&P 500 index opening up 0.5 per cent after a public holiday on Monday.

“The reflationary trade has gained some notable momentum in February and global stock markets are thriving as the prospect for massive US fiscal stimulus, flattening Covid-19 infection curves, and the global vaccine rollout emboldened expectations for a rapid recovery and underpinned investor sentiment,” said Candice Bangsund, portfolio manager at Fiera Capital.

Such optimism was reflected in Bank of America’s Global Research report. Only 13 per cent of its respondents said the US equity market was in a bubble, 27 per cent thought US equities were in an early-stage bull market, while slightly more than half believed US stocks were in a late-stage bull market.

In Asia, mainland Chinese markets are shut for a public holiday, but Hong Kong’s Hang Seng added 1.9 per cent and Japan’s Nikkei 225 average gained 1.3 per cent.

UBS Global Wealth Management noted that Asian stocks had gained faster than their US counterparts so far this year, but it still expected a further 10 per cent rise this year.

“Investors may be understandably concerned that Asian equities are getting frothy,” wrote the wealth manager’s chief investment officer Mark Haefele. “But it’s important to remember that we are only at the early stages of the economic recovery. Macro momentum in Asia is strong, and conditions are supportive of robust profits across sectors and regions this year.”

In Europe, London’s FTSE 100 was up 0.1 per cent in the afternoon, taking the index’s gains so far this month to 5.6 per cent. “The UK market has never, ever been so cheap,” said Didier Rabattu, head of equities at Lombard Odier Investment Management. He highlighted a move by investors into “value stocks” — those judged to be inexpensive relative to their earnings or assets — in the banking, energy and mining sectors.

Oil prices hovered near 13-month highs, with international benchmark Brent slipping 0.5 per cent to $63.06 a barrel while US marker West Texas Intermediate was up 0.4 per cent at $59.69 a barrel.

Elsewhere in Europe, Mario Draghi, former president of the European Central Bank, was sworn in as Italy’s prime minister. The country’s government bonds were flat on Tuesday, but are holding on to the bulk of their gains since Draghi’s shift into politics was announced.

“Our baseline scenario is that Italian government bonds can rally further on the back of lower political uncertainty and buying flows from foreign investors,” said analysts at UniCredit.

“There’s much less risk in Italy,” said Fahad Kamal, chief investment officer at Kleinwort Hambros, Société Générale’s private banking and wealth management division. “But, if you look at Italy in the postwar period, very few governments last longer than a year and ultimately Italy’s problems are deep and structural,” he added.