Market rally on sign US stimulus won't end soon

The sharemarket closed higher as blue-chip stocks such as the big four banks, BHP Billiton and Telstra rallied after selling down the previous day.

The benchmark S&P/ASX 200 Index added 36.2 points, or 0.7 per cent, to 5355.4, while the broader All Ordinaries gained 34.5 points, or 0.6 per cent, to 5352.0.

Comments before the market opened from Janet Yellen, expected to be confirmed as the chairman of the US Federal Reserve, that the central bank "has more work to do" to support economic growth led many to speculate she is unlikely to begin reducing the stimulus this year.

Dr Yellen's tone contrasted with comments from one of her fellow Federal Open Market Committee members the previous day.

"Equities are volatile at the moment in response to the to-ing and fro-ing about when tapering will begin as everybody tries to second-guess what the impact will be on different sectors," Contango Asset Management large cap portfolio manager Shawn Burns said.

"Yellen saying she intends to keep up stimulus means interest rates will stay low longer, which is why the big four banks bounced back today."

Commonwealth Bank rallied 1.2 per cent to $77.20, Westpac rebounded 1.2 per cent to $32.65. ANZ rose 1.3 per cent to $31.84 and National Australia Bank recovered 0.4 per cent to $33.78.

Healthcare was the best-performing sector, up 1.1 per cent as plasma and vaccine maker CSL rose 0.8 per cent at $67.60. Among the miners, BHP Billiton rose 0.5 per cent to $37.82, Rio Tinto added 0.8 per cent to $65.13 and Fortescue gained 0.9 per cent to $5.82.

Telstra rose 0.4 per cent at $5.13.

Nickel, copper and zinc explorer Independence Group was the worst-performing stock, down 6.8 per cent at $3.42.

Building materials supplier James Hardie was the best-performing stock, climbing 14.9 per cent to a record $12 after it showed net profit had more than doubled in the six months to September 30.

"A major theme this AGM season has been relief rallies," Mr Burns said.

Virgin fell 1.2 per cent to 40.5¢, before entering a trading halt after it announced a $350 million equity raising.