Stocks rise as Janet Yellen says US must 'act big' on stimulus

European stocks had a mixed session and US stocks rose on Tuesday, as incoming Treasury secretary Janet Yellen said the US had to “act big” on stimulus measures.

US president-elect Joe Biden’s nominee appeared at her confirmation hearing before lawmakers. Remarks released in advance showed she would make the case for the new administration’s planned $1.9tn (£1.4tn) spending package with interest rates at historic lows.

"The damage has been sweeping, and as the president-elect said last Thursday, our response must be too," she was expected to say.

European stocks started the day in the green on strong Chinese and German economic data, but dipped in afternoon trading. The FTSE 100 (^FTSE) rose 0.6%, the DAX (^GDAXI) gained 0.4%, and the CAC (^FCHI) was up 0.3%.

READ MORE: Firms hit with €273m in fines for GDPR infringement

US markets also made gains at the open after strong bank earnings, with Goldman Sachs reporting a doubling in fourth-quarter profits. The S&P 500 (^GSPC) rose 0.4% in early trade, the Dow (^DJI) rose 0.2% and the Nasdaq (^IXIC) rose 0.7%.

Michael Hewson, chief market analyst at CMC Markets UK, said Yellen would like face questions about the strength of the dollar, as well as concerns about the debt burden of Biden’s stimulus plan.

“This is the main concern of the more fiscally conservative US lawmakers, and something that Janet Yellen will have to use all of her political skills to convince is necessary in the short term at least,” he said.

Asian stocks had risen overnight, with economic confidence continuing to grow after better-than-expected GDP data in China on Monday.

The official figures showed the world’s second biggest economy growing faster than it was before the pandemic hit, with a 6.5% jump in output in the final quarter of 2020.

MSCI’s Asia-Pacific index rose 1.6%, close to record highs, according to Reuters. Japan’s Nikkei (^N225), which is not included on the index, pushed 1.4% higher.

Hong Kong’s Hang Seng index (^HSI) surged 2.7%. Shares in China itself dipped however with the country grappling with its worst COVID-19 outbreak since early 2020, after outperforming the region on Monday.

The Shanghai Composite (000001.SS) lost 0.8%, and the Shenzen Component (399001.SZ) lost 1.7%.

Meanwhile the closely watched ZEW economic sentiment survey in Germany showed greater optimism in Europe’s biggest economy than expected by analysts.

WATCH: What does a Joe Biden presidency mean for the global economy?