The rebound in shares looks likely to extend to a fifth day after Wall Street cheered a 'more of the same' message from new Federal Reserve Chair Janet Yellen.
The March SPI 200 futures contract jumped 36 points or 0.7% to 5239 as US stocks rallied for a fourth night, bringing strong gains for the big two Australian miners.
The S&P 500 stretched its four-day recovery beyond 4% with an overnight rise of 20 points or 1.12% as traders welcomed a surprise-free Congressional debut from the new Fed chief. The Dow gained 193 points or 1.22% and the Nasdaq put on 1.03%.
Yellen emphasised continuity as she made her first public remarks since succeeding Ben Bernanke as the head of the world's most important central bank. The new chief said she strongly supported the current strategy of record low interest rates and a gradual withdrawal of stimulus spending as the economy improves. Read more here.
"The market likes consistency and what we've heard this morning has been consistent with what we've heard for months," Steven Rees, head of US equities at JPMorgan Private Bank, told Bloomberg. "Tapering continues, but it continues to be the result of an economic situation that's slowly improving. The economy is still on track to have a good year."
The night also brought positive developments on Capital Hill, where House Republican leaders abandoned plans to attach conditions to an increase in the US debt ceiling. The revised bill would suspend the debt limit until March 15 next year but Republican House leader John Boehner said he needed to rally support within his own party for the bill.
An improvement in risk appetite was underlined by a rotation back into risk assets. The Morgan Stanley Cyclical Index surged 1.38%. Energy, industrial and materials stocks led sector gains on the S&P 500 as all 10 industries advanced.
Rio Tinto pushed to its highest level in US trade in nearly a year, rising 3.41%. BHP added 2.85%. Spot iron ore for import to China yesterday slipped 80 cents to US$120 a dry tonne.
A fifth night of gains saw gold threatening a three-month high just under US$1,300 an ounce. Gold for April delivery was recently up $15.10 or 1.2% at US$1,290 after settling at US$1,291.
Most base metals declined after China's banking regulator tightened reserve requirements for some lenders. Read more here. In London, copper dropped 0.2% and nickel 1%. Aluminium also fell. Lead was flat. US copper for March delivery was recently up 0.1% or a fraction of a cent at US$3.23 a pound.
Oil consolidated five days of gains near the US$100 a barrel level. West Texas Intermediate crude oil for March delivery was lately off 17 cents or 0.2% at US$99.89 after settling at US$100.04.
European stocks reached their highest level in three weeks as Yellen began her testimony. The Stoxx Europe 600 index charged 1.3% with Germany's DAX advancing 2.03%, France's CAC 1.09% and Britain's FTSE 1.23%.
TRADING THEMES TODAY
RESULTS FLOOD: Wall Street heard what it wanted to hear from Janet Yellen, so the rebound continues. When the market is this buoyant it shrugs off every disappointment, but there were a few yesterday among the big guns reporting earnings. Today brings a deluge of interim and full-year reports, including the biggest bank by market weighting, CBA. Other notable companies reporting include BLD, CPU, CRZ, CSL, DMP, DXS, GFF, NBL, OZL, SGP and SGH. Another potential market-mover is the monthly Chinese trade balance report, which normally drops around noon/1pm EST. Gold and oil both look to be at critical levels for their short and medium-term direction.
ECONOMIC NEWS: The monthly Westpac Consumer Sentiment index is due at 10.30am EST. Chinese trade data is due this morning, usually around noon/1pm. Europe releases industrial production figures tonight and European Central Bank President Mario Draghi is due to deliver a speech. A light night ahead in the US includes the Federal budget balance and crude oil inventories.
