European Stocks Surge, Oil Continues Lower

European stocks surged on Monday, following Wall Street’s lead after markets regained confidence that the European Central Bank would do more to boost the struggling Eurozone economy.

All of Europe’s major averages reported gains on Monday, led by a 2.2% spike in Frankfurt’s DAX Index. The CAC 40 Index in Paris also rallied 1.8%. London’s FTSE 100 was up 0.6% by midday. The pan-European STOXX 600 Index jumped 1.4% after posting its biggest weekly loss in more than three months.

European stocks were supported by better risk sentiment after ECB President Mario Draghi announced on Friday that the central bank was not limited in its policy tools. Draghi’s remarks helped support a massive rally on Wall Street, with the Dow Jones Industrial Average and S&P 500 Index each climbing 2.1%.

American stock futures continued to trade higher on Monday, with the Dow Jones mini climbing 10 points.

Expectations for more aggressive ECB stimulus resulted in a sharp pullback for the euro on Monday. The EUR/USD exchange rate fell 0.7% to 1.0812 following a daily low of 1.0795.

The US dollar enjoyed strong support at the beginning of the week, with the dollar index adding 0.5% to 98.81.

The rally in European stocks followed a mostly positive session in Asia. Tokyo’s benchmark Nikkei Index rallied 194 points or 1%, extending its four-week gain to 2.3%.

In China, the Shanghai Composite Index closed up 0.3%. The CSI 300 Index, which tracks shares in Shanghai and Shenzhen, also rose 0.3%. Meanwhile, Hong Kong’s Hang Seng Index declined 0.2%.

Chinese markets could face significant price action on Tuesday and Wednesday with the release of official trade and inflation figures for November. China’s exports and imports are forecast to decline again in November, while inflation is also expected to weaken.

In commodities, oil prices continued to drift lower after the Organization of the Petroleum Exporting Countries (OPEC) announced on Friday it would keep crude oil production above 30 million barrels per day in an effort to retain market share. OPEC officials had earlier told Reuters that the cartel increased its production ceiling to 31.5 million barrels per day.

The West Texas Intermediate (WTI) benchmark for US crude tumbled 65 cents or 1.6% to $39.32 a barrel on the New York Mercantile Exchange. Brent crude, the international benchmark, fell 39 cents or 0.9% to $42.61 a barrel on ICE Futures Europe.