Stocks jump following dovish Yellen testimony

Currency exchange rates general

Federal Reserve Chair Janet Yellen's second day of testimony on Capitol Hill also attracted attention when she said gradual interest rate hikes are appropriate over the next few years.

Estimating a positive economic prospect for the US, Janet L Yellen, Chairwoman, Federal Reserve System Board has told the American lawmakers that the world growth is likely to boost the US exports.

MSCI's gauge of stocks across the globe gained 0.90 percent while the pan-European FTSEurofirst 300 index of leading regional shares rose 1.64 percent and emerging market stocks rose 1.10 percent.

Japan's Topix index added 0.3 per cent. Australia's S&P/ASX 200 Index and South Korea's Kospi each advanced 0.4 per cent. Hang Seng futures were flat. "But because we also anticipate that the factors that are now holding down the neutral rate will diminish somewhat over time, additional gradual rate hikes are likely to be appropriate over the next few years to sustain the economic expansion and return inflation to our 2 percent goal".

The head of the United States central bank, the Federal Reserve, added that while rates will continue to rise, they would likely remain at historically low levels for some years to come. He explained that the main mystery of the U.S. economy lately has been why low unemployment growth has not translated into stronger growth of wages and prices. She is expanding on her views on inflation, emphasizing that the dual risks to inflation: prices rising too slowly and prices accelerating too quickly.

"Given that other central banks are thinking about it, I think it would be remiss of us not to at least think about it", said McCafferty, who voted in favour of an immediate rate hike last month.

The dollar was 0.09 percent higher against the yen.

She said that the central bank would be monitoring inflation developments closely in the months ahead. The euro led gains on expectations the European Central Bank could send hawkish signals at its meeting next week while the pound also rose after the Bank of England's Ian McCafferty suggestedin an interview with The Times he favored faster unwinding of quantitative easing.

But when the ASX opens for business, the local bourse is on track to rebound from yesterday's weak performance, when it fell nearly 1 percent. The dollar slipped as Yellen´s comments sparked a significant decline in U.S. Treasury yields.

New Zealand's two-year swap rate fell 4 basis point to 2.25 percent, and 10-year swaps fell 4 basis points to 3.32 percent.

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