Local shares are poised to lift at the open as Wall Street rallied on a signal that US rates won't rise too soon or too fast.
What you need2know
Yellen: Fed foresees gradual rate hikes
Federal Reserve Chair Janet Yellen says that the Fed still envisions a gradual pace of interest rate increases in light of global pressures that could weigh on the US economy.
SPI futures up 33pts or 0.7% to 5026 at about 7am Sydney time
AUD to 76.42 US cents, 86.09 Japanese yen, 67.61 Euro cents and 53.00 British pence
On Wall St, Dow +0.6%, S&P 500 +0.9%, Nasdaq +1.7%
In Europe, Stoxx 50 +0.6%, FTSE flat, CAC +0.9%, DAX +0.4%
In London, Rio -3.85%, BHP -3.65%
Spot gold +1.4% to $US1239.35 at 3.38pm New York time
Brent crude -2.6% to $US39.24 at 3.12pm New York time
Iron ore slips 1.2% to $US55.11 per tonne
What's on today
Overseas data: US MBA mortgage applications (weekly), US ADP private employment (March), Brazil IGP-M inflation (March), Brazil primary budget balance (Feb.), Japan industrial production (Feb.), euro-area economic confidence (March), Germany inflation (March)
Overseas earnings: Micron Technology, Industrial & Commercial Bank of China Ltd, China Construction Bank Corp, Bank of China Ltd, China Cosco Holdings Co, China Eastern Airlines Corp, Air China Ltd, China Southern Airlines Co.
The US currency dropped 0.9 per cent to $US1.12982 per euro and fell 0.7 per cent to 112.64 yen, sending the Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, toward a monthly drop of 3.4 per cent, the biggest since April 2011.
Traders slashed the likelihood of a rate increase in April to 2 per cent, down from 6 per cent on Monday, and lowered the probability of a hike in June to 28 per cent from 38 per cent, based on the assumption that the effective fed funds rate will trade at the middle of the new FOMC target range after the next increase.
"The dollar is really not your best bet right now," Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas in New York, said in an interview on Bloomberg Television. "Every time you have the dollar rising, concerns about China devaluation, concerns about emerging-market growth, concerns about commodity markets - those start to resurface."
Commodities including oil and copper are at risk of steep declines as recent advances aren't fully grounded in improved fundamentals, according to Barclays, which warned that prices may tumble as investors rush for the exits. Barclays sees copper averaging $US4520 next quarter, $US4300 between July and September and $US4180 in the final three months.
The bank sees Brent at $US36 next quarter, followed by $US40 and $US43 in the two quarters in the second half.
Three-month copper on the London Metal Exchange was untraded in official rings but bid down 1 per cent at $US4910 a tonne, having hit a two-week low of $US4880 a tonne. The metal used in power and construction has risen more than 5 per cent so far in March and is on track for its strongest month in more than a year on signs of recovery in China's property market.
US stocks rose, with the Standard & Poor's 500 Index posting a 2016 high, as Federal Reserve chair Janet Yellen signalled the central bank will be cautious on further interest-rate increases in a nod to global risks.
Equities saw the strongest gains since the conclusion of the last Fed meeting, when policy makers reduced their outlook for rate increases this year, citing negative developments overseas. The dollar repeated a post-Fed selloff, helping to boost commodity and industrial shares on speculation the weaker currency will buoy earnings.
"Yellen reiterated that the Fed will proceed cautiously, and the market is finding comfort in that," said Richard Sichel, chief investment officer at Philadelphia Trust Co, which oversees $US2 billion. "There were no surprises, and surprises are what normally sends the market going the wrong way. Investors can now start to key in on some economic numbers, and then begin to look ahead to earnings."
Equities climbed even as crude retreated for a fourth day, paced by gains in technology, health-care and consumer shares. Stocks pared early declines after a March gauge of consumer confidence rebounded. A separate report today showed home values in 20 US cities continued to climb in January. Reports are also due this week on employment and manufacturing.
European stocks rose, snapping their longest losing streak in more than a month, as markets reopened after the Easter holiday.
The Stoxx Europe 600 Index added 0.5 per cent at the close of trading. It earlier erased an increase of as much as 1 per cent as miners reversed gains. Real-estate shares posted the biggest gains on the gauge, with LEG Immobilien and Immofinanz up 2.5 per cent or more.
The benchmark rallied as much as 14 per cent since a February 11 low to a two-month high amid optimism about central-bank policies, before losing steam. It's still on course for its first monthly advance since November, rising 0.9 per cent.
A gauge of commodity producers tumbled for a fifth day, its longest losing streak since January, as Anglo American and Glencore dropped at least 4.3 per cent. Energy shares tracked a decline in crude prices for the second-worst performance in the Stoxx 600.
What happened yesterday
Australian shares fell sharply on Tuesday, led down by another vicious sell-off in the banks as investors continued to punish the big four following last week's warning by ANZ Banking Group that bad debts will rise more than previously flagged.
While heavy falls in the big four led the market down, most sectors also ended in the red, with losses accelerating in afternoon trade.
The S&P/ASX200 index briefly slipped below the 5000 territory for the first time in nearly four weeks before closing just above that level, falling 1.6 per cent to 5004.5, while the broader All Ordinaries declined 1.5 per cent to 5076.2.