Yellen comments push Wall Street to 7-month high
Wall Street has closed at a seven-month high after the head of the US Federal Reserve Janet Yellen said interest rates would rise gradually once the US economy improved, indicating a likelihood rates would remain on hold.
In a speech overnight in Philadelphia, Dr Yellen said last week’s US employment report was “disappointing” but she expected the positive forces in the economy to outweigh the negatives.
“If incoming data are consistent with labour market conditions, strengthening, and inflation making progress toward our 2 per cent objective, as I expect, further gradual increases in the federal funds rate are likely to be appropriate and most conducive to meeting and maintaining those objectives,” she said.
“However, I will emphasise that monetary policy is not on a preset course and significant shifts in the outlook for the economy would necessitate corresponding shifts in the appropriate path of policy.”
On Wall Street, investors cheered the comments as US stocks were also boosted by energy shares.
The S&P 500 closed at its highest since November, adding 0.5 per cent or 10 points, to 2,109.
The Dow Jones Index rose 0.6 per cent or 113 points, to 17,920.
The Nasdaq gained 0.5 per cent or 26 points, to 4,969.
European shares climbed to four-week highs, the FTSE 100 in London was boosted by a rally in metals prices, adding 1 per cent or 64 points, to 6,273.
In Germany, the DAX rose 0.2 per cent or 18 points to 10,121, while the CAC 40 in Paris was flat at 4,423.
In local futures trading, the ASX SPI 200 is up 0.3 per cent or 15 points to 5,378, indicating the local share market will tick higher at the open.
Among currencies, the Australian dollar surged briefly to nearly 74 US cents overnight after Dr Yellen’s speech, but pared back gains to trade at 73.7 US cents about 9:00am AEST.
It was also buying 51 British pence, 64.9 Euro cents, 79.3 Japanese yen and $NZ1.06.
In commodities, spot gold rose to $US1,244.97 an ounce.
West Texas crude oil increased to $US49.69 a barrel after crippling attacks on Nigeria’s oil industry reduced output.