Gains have been made in nearly all sectors of the share market as it rose by more than one per cent, following signals from the US Federal Reserve that it will gradually tighten interest rates.
The benchmark S&P/ASX200 index rose 1.1 per cent to 5,736.8 points, and the Australian dollar was also well supported, surpassing 77 US cents to its highest level since March.
Wall Street’s Dow Jones Industrial Average closed at a record high following US Federal Reserve Chair Janet Yellen’s congressional testimony.
Investors interpreted Yellen’s speech as meaning that the central bank will gradually tighten policy and gradually unwind its huge asset portfolio.
Atlantic Pacific Securities client adviser Gary Huxtable said the move on US markets overnight had been one of the most positive seen recently, and Australian investors followed the sentiment.
The reasons behind the lift in the local bourse were twofold, he said.
“One is our market was naturally at the bottom of its recent range, so it’s been identified as an area of value,” Mr Huxtable said.
“The second was Yellen’s comments regarding the gradual increase in interest rates and also discussing the normalisation of the balance sheet.”
Healthcare stocks led the gains, with blood products and vaccines maker CSL jumping 2.8 per cent to $132.76.
Hearing implant supplier Cochlear lifted 2.4 per cent to $153.50 as it said it is spending $50 million on a manufacturing facility in China.
Among the big four banks, Westpac added 1.9 per cent, ANZ rose 0.6 per cent and Commonwealth Bank and National Australia Bank each found 0.5 per cent.
BHP BIlliton improved 0.5 per cent while Rio Tinto and Fortescue Metals both dipped 0.4 per cent.
Whitehaven Coal rose 1.7 per cent to $2.92, bouncing back from a fall of more than two per cent during morning trade after its annual production fell just short of its guidance.