Global stocks rose yesterday after Federal Reserve chairman Ben Bernanke promised to keep supporting the US economy. Mr Bernanke said that the US needs "highly accommodative monetary policy"  ‐  or low interest rates  ‐  "for the foreseeable future". That reassured investors who were dismayed by Mr Bernanke's comments last month that the Fed would likely slow its bond purchases later this year and end them around mid‐2014 if the economy strengthens. Critics said that the Fed bungled its communications strategy.

The Fed has been buying US$85 billion of financial assets a month to keep interest rates low and encourage borrowing and spending. That stimulus has driven global stocks higher,so the prospect of reducing it caused market volatility in recent weeks.

"In one short and sweet statement, Federal Reserve chairman Bernanke has flicked a switch on the markets," said strategist Evan Lucas of Australia's IG Markets in a report.

Wall Street opened higher, adding to the previous day's gains. The Dow was up one per cent at 15,437.65 while the broader S&P 500 was 1.1 per cent higher at 1,669.73. Germany's DAX rose 1.2 per cent to 8,163.64 and France's CAC‐40 gained 0.9 per cent to 3,874.19. Britain's FTSE 100 rose 0.8 per cent to 6,554.21. Commodity stocks were the big gainers, as the promise of more support to the US economy, the world's largest, suggested greater demand from consumers and industry. Oil rose to trade briefly above US$107 a barrel, near the highest level in more than a year, before easing back down. After soaring US$2.99 the day before, it was down US$1.15 yesterday, at US$105.37.

In Asia, gains were stronger than anywhere else. The Shanghai Composite Index jumped 3.2 per cent to 2,072.99, its biggest gain in nearly seven months, while Hong Kong's Hang Seng rose 2.6 per cent
to 21.437.49. Tokyo's Nikkei 225 added 0.4 per cent to 14,472.58.

Source: AmFraser