Investors positive ahead of Fed meeting
The benchmark S&P/ASX 200 Index gained 47 points, or 0.98 per cent, to 4861.4, while the broader All Ordinaries Index gained 47.2 points, or 0.98 per cent, to 4841.8.
Federal Reserve chairman Ben Bernanke was to update the market overnight in the US, and investors are keen for an update on the Fed's $US85 billion ($89 billion) a month asset purchase program, known as quantitative easing (QE).
The Fed has indicated the bond purchases will continue until the outlook for the US job market improves substantially, but investors want a clearer timetable.
"With the marquee event of the week now imminent, traders have been positioning for a QE-friendly stance from Bernanke," CMC Markets senior trader Tim Waterer said.
But any notice from the Fed that it will begin pulling back on economic support would be bad for markets, he said.
"While the ASX 200 undoubtedly enjoyed a productive session, if Bernanke does not tell the market what it wants to hear this evening then today's gains could quite easily be reversed."
Almost all sectors of the market rose on Wednesday, although the banks were slightly weaker.
"Materials stocks were among the highlights on the Australian market today, while the energy sector found confidence from the strengthening oil price," Mr Waterer said.
Rio Tinto added 83¢ to $54.38 and BHP Billiton gained 30¢ to $32.99. Woodside Petroleum rose 82¢ to $35.65, Oil Search gained 16¢ to $8 and Santos was 15¢ higher at $12.80.
Among the banks, Westpac lost 22¢ to $29.23, Commonwealth Bank dropped 13¢ to $68.36, ANZ shed 3¢ to $28.35 and National Australia Bank gained 30¢ to $30.04.
The spot price of gold in Sydney finished at $US1369.24 an ounce, down $US9.66.
Meanwhile, the dollar recovered from early weakness to end little changed as traders marked time before the Fed meeting.
Late on Wednesday, the Aussie was trading at US94.91¢, after trading as low as US94.34¢.
A winding back of the Fed's QE program would suggest the end of near-zero short-term rates in the US is also getting closer.
Frequently Asked Questions about this Article…
The benchmark S&P/ASX 200 rose 47 points, up 0.98%, to 4861.4, while the broader All Ordinaries gained 47.2 points, also 0.98%, to 4841.8 as investors took a cautiously optimistic stance ahead of a key US Fed update.
Investors were positioning for a QE-friendly message because the Fed was expected to comment on its $US85 billion ($89 billion) a month asset purchase program (quantitative easing). Traders wanted clarity on the timetable for continuing or winding back the bond purchases that support markets.
Quantitative easing (QE) refers to the Fed's large-scale bond purchases to support the economy. The article notes that a clear signal the Fed will start pulling back QE would likely be negative for markets and could signal the end of near-zero short-term US interest rates, which in turn can weigh on Australian shares and risk assets.
Materials stocks were among the highlights, and the energy sector also gained confidence from a strengthening oil price, helping lift most sectors on the market while banks were slightly weaker.
Rio Tinto added $0.83 to close at $54.38, and BHP Billiton gained $0.30 to $32.99, reflecting strength in the materials sector during the session.
Banks were slightly weaker overall: Westpac fell $0.22 to $29.23, Commonwealth Bank dropped $0.13 to $68.36, ANZ shed $0.03 to $28.35, while National Australia Bank was an exception and gained $0.30 to $30.04.
The spot price of gold in Sydney finished at $US1369.24 an ounce, down $US9.66. The Australian dollar recovered from early weakness and ended little changed, trading at US94.91¢ after dipping as low as US94.34¢.
According to market commentary in the article, any notice that the Fed will begin pulling back economic support would likely be bad for markets and suggest the end of near-zero short-term US rates is getting closer, which could reverse recent gains in risk-sensitive assets.
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