Market roars back to life as stocks soar 2.5pc in early Santa rally

AUSTRALIA’S sharemarket roared back to life yesterday.

Australia’s sharemarket posted its biggest one-day rise in 18 months.

AUSTRALIA’S sharemarket roared back to life yesterday, posting the biggest one-day rise in 18 months and adding nearly $36 billion to the value of stocks.

The surge followed sustained strength in global sharemarkets after the US Federal Reserve said it would be “patient” on raising interest rates, and crude oil prices remained near five-year lows.

The benchmark S&P/ASX 200 closed up 2.5 per cent at 5338.6, notching its biggest two-day rise in three years. Offshore markets, including Japan and Hong Kong, saw similar gains.

Shares rose strongly after a statement from the US Federal Reserve this week that the world’s most powerful central bank was confident about the US economy and in no rush to lift interest rates.

While it dropped a longstanding reference to the appropriateness of interest rates remaining near zero for a considerable time after the end of its quantitative easing in October, the Fed said its statement was consistent with previous guidance on interest rates.

“We’ve seen the market switch 180 degrees this week,” Macquarie Private Wealth division ­director Martin Lakos said.

“From concern about oil price volatility and what the Federal Reserve would say about interest rates, the market is starting to accept that US interest rates will stay low and the low oil price is going to reflate global economic growth.”

Brent crude oil, the global benchmark, has fallen about 50 per cent since June.

Industrial companies, miners and financials led broad-based gains in the Australian market.

BHP Billiton jumped 3.4 per cent, while Westpac rose 2.9 per cent, and Brambles soared 3.7 per cent.