The FTSE 100 rebounded on Tuesday in a global risk on rally sparked by optimism around the economic recovery from coronavirus.

The FTSE 100 rose over 1.9% to 5,860 and oil prices jumped with WTI up 14% and Brent up over 10%. Any increase in economic activity has the potential to avert an oil storage crisis and lift prices further.

Oil majors BP and Shell added a significant number of points to the FTSE 100 as they both posted intraday gains in excess of 8% in afternoon trade on Tuesday.

In addition to a strong rally in oil companies, financials and industrial shares posted strong gains in a broad rally with Melrose rising 5% and Barclays 3% higher.

Many countries have begun to reopen their economies or at least laid out plans for a gradual move back to some form of normality.

Any reopening of economies will have a significant impact on demand that’s been obliterated by lockdowns in the world’s leading economies.

However, the optimism in markets came during a raft of poor economic data from the United States confirming coronavirus had caused huge disruption in the manufacturing sector.

Despite the poor data, markets rallied on optimism surrounding a broad reduction in the number of new coronavirus cases and what it could mean for economic data in the coming months.

“If things continue to improve – the number of cases fall and governments reopen economies to some extent – then, while this might be a very deep recession, it might also be a very short one, so there is reason to think that stock prices will look past a short period of very bad economic growth,” said Simona Gambarini, economist at Capital Economics.

Equity markets also shook off negative comments from investor Warren Buffett who has recently sold off all Berkshure Hathaway’s airline holdings saying the economy wouldn’t return to what it was before COVID-19 for many years and airlines would feel it the most.