NEW YORK (Reuters) – Global equity markets surged on Thursday, with U.S. and European benchmark indexes hitting record highs, as the strongest manufacturing data around the world in decades and a drop in bond yields drove investor optimism.

U.S. President Joe Biden’s sweeping $2.3 trillion plan to rebuild America’s crumbling infrastructure added to the enthusiasm for risk assets, as did accelerating vaccine rollouts.

The dollar fell, easing off nearly three-year highs in the first quarter, while U.S. crude futures rose more than 4% after the Organization of the Petroleum Exporting Countries and allies agreed to start easing production cuts in May.

Asian markets ended with a late burst pushing Chinese shares up 1.2%, while Europe’s STOXX 600 shrugged off France’s new lockdown order to close near its pre-COVID record high.[.EU]

Germany’s DAX index scaled a new peak after IHS Markit’s Manufacturing Purchasing Managers’ Index (PMI) showed euro zone factories were seeing their fastest pace in growth in the survey’s near 24-year history.

On Wall Street, the S&P 500 also touched a new high as it charged past the 4,000 mark after the Institute for Supply Management said its index of U.S. factory activity soared to its highest level in more than 37 years in March.

The DAX is up a little more than 10% year to date, while the S&P 500 has gained 7% since the start of 2021. The Nasdaq remained about 5% below its peak in February, still smarting after a recent surge in bond yields hurt technology stocks.

Microsoft and Google parent Alphabet rose more than 2% as big tech rebounded after lagging in recent weeks behind so-called value stocks that are expected to outperform as the economy recovers from the coronavirus pandemic.

There are multiple tailwinds – stimulus, expectations of record earnings, vaccines – driving stocks higher, said King Lip, chief investment strategist at Baker Avenue Asset Management in San Francisco.

“With stimulus, with the Fed committed to being dovish, with the economy reopening due to more of the U.S. getting vaccines, overall you’re going see corporate earnings do pretty well.”

MSCI’s benchmark for global equity markets rose 1.1% to 680.69, while Europe’s broad FTSEurofirst 300 index closed up 0.59%.

On Wall Street, the Dow Jones Industrial Average rose 0.52%. The Nasdaq Composite added 1.76%, riding the tech rally, while S&P 500 gained 1.18% to close above 4,000.

Reaching the 4,000 mark could be an inflection point that renews investor confidence that the bull cycle in stocks is not over, said Matt Hanna, portfolio manager at Summit Global Investments in Salt Lake City.

“We’re definitely seeing major speculation in various parts of the market,” Hanna said. “We don’t see that ending right now, but at some point the music’s going to have to stop.”

The dollar eased a bit after a 3.5% first-quarter gain. The dollar index fell 0.333%, with the euro up 0.4% to $1.1775. The Japanese yen strengthened 0.12% versus the greenback at 110.59 per dollar.

Graphic: U.S. yields and inflation

Higher-than-expected weekly jobless claims pushed U.S. Treasury yields lower, flattening the yield curve, but did little to dampen investor expectations of Friday’s monthly employment report.

The Labor Department said the number of Americans filing new claims for unemployment benefits unexpectedly rose last week. The jobless claims number wasn’t as great as everyone had hoped, but halted the recent rise in bond yields, Lip said.

“A little bit of a slowdown is going to be an improvement on rates,” he said.

The 10-year U.S. Treasury note fell 6.9 basis points to yield 1.677%.

Brent crude futures rose $2.12 to settle at $64.86 a barrel, while U.S. crude futures settled up $2.29 at $61.45 a barrel.

Gold rose more than 1%, buoyed by a retreat in the dollar. U.S. gold futures settled up 0.7% at $1,728.30 an ounce.

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