The New York Stock Exchange rose strongly overnight after the chairman of the US Federal Reserve, Ben Bernanke, said unemployment was still too high and said the bank would not be withdrawing low-interest rates in the near future.
“Importantly, despite the recent improvement, the job market remains far from normal; for example, the number of people working and total hours worked are still significantly below pre-crisis peaks, while the unemployment rate remains well above what most economists judge to be its long-run sustainable level,” Bernanke says.
David Kelly, the chief market strategist at JP Morgan Funds in New York, told Bloomberg Bernanke was in a difficult position.
“The Federal Reserve is mostly relying on the Fed’s speech as opposed to money to move markets,” Kelly says. “What he’s trying to say is that they’re going to be pretty slow to remove stimulus.”
The strong run saw more gains for financial and energy companies. Among the US financial gainers, JP Morgan Chase (JPM:US) was up 2.24% to $US46.17. Oil companies Chevron (CVX:US) and Exxon-Mobil (XOM:US) also rose.
The S&P500 Index increased 1.39% to 1416.51.
The Dow Jones Industrial Average was also up 1.23%, or 160.90 points, to 13241.60.
The NASDAQ Index gained a solid 1.78% to 3122.57.
West Texas Intermediate (WTI) oil was up 0.23% to $US107.12 a barrel overnight.
Gold lifted 1.78% to be trading at $US1694.60 an ounce.
The Australian dollar rose overnight on the positive news coming out of the northern hemisphere. It bought $US1.0534 at 8.40am AEST.
European sharemarkets gained overnight. In Frankfurt the DAX rallied after German chancellor Angela Merkel said she would allow an increase in the debt crisis firewall.
“But in order for us to have the full 500 billion at our disposal, we could imagine that we let the programs that have already been disbursed run in parallel,” Bloomberg reports.
The London FTSE 100 closed up 0.82% to 5902.70.
The German DAX rose 1.20%, or 83.61 points, to 7079.23.
The European Stoxx50 index increased 0.57% to 2539.87.
Dusseldorf-based consumer products multinational, Henkel, rose 4.04% to 55.049 euros overnight. Henkel (HEN3:GR) is famous for making the first mass-marketed laundry detergent. It now owns brands such as Schwarzkopf hair-care and Spree washing powder.
Another movers in Europe was Heidelberg Cement Heidelberg (HEI:GR), which was up 3.46% to 46.35 euros.