Shares started the new month on an upbeat note, with investors looking ahead to an upcoming earnings season to deliver some solid corporate results.

The S&P/ASX 200 index climbed 52 points, or 0.9 per cent, to 6090 while the All Ordinaries rose by the same point and percentage amount to 6198. The Australian dollar reached US80.41c.

The ASX jumped higher from the open, shrugging off a lacklustre lead from Wall Street where stocks flattened after the US Federal Reserve signalled it remains on track to boost interest rates again in March.

The Federal Reserve meeting followed US President Trump's State of the Union address, where a conciliatory Mr Trump put the US economy at the forefront of an appeal for political cooperation between divided parties.

There appears to be more confidence around developments in the US, noted Karen Jorritsma, director of equity sales at Citi global markets.

In addition, reporting season is set to start in earnest in Australia shortly, she noted. The general lack of companies telling the market to prepare for bad news has been notable, she added.

"Things are looking good from a sentiment point of view," Ms Jorritsma said.

Investors were buying banks and miners as well as consumer discretionary stocks.

In the mining sector, BHP shares climbed 1.5 per cent to $30.66, South32 shares advanced 1.8 per cent to $3.89 and Rio Tinto climbed 1.1 per cent to $77.70.

Banks on the move included CBA, up 1.5 per cent to $80.01, Westpac, up 1.5 per cent to $31.42 and ANZ, up 1.1 per cent to $28.90.

Woolworths shares climbed 1.2 per cent to $27.28 with Citi retail analysts flagging the firm as a major improver over the Christmas trading period while upgrading their earnings per share forecasts by 1.5 per cent.

The Citi analysts have pencilled in 4.7 per cent like-for-like sales growth at Woolworths' supermarkets. They are expecting 0.5 per cent from rival Coles.

On the other side of the Christmas sales story, Godfreys slumped almost 17 per cent to 32c, an all-time low for the shares. The vacuum cleaner retailer said sales were weak during the Christmas period, and warned investors that impairments could lead to a half year loss of around $59 million.

Infant formula, baby food, and milk powders supplier Wattle Health was another big mover, with the firm jumping 10.6 per cent to $2.50 after telling shareholders it's expanding its presence in Asia, securing its first order from Macau just a day after breaking into the Indian market.

What moved the market:

Fire up

UBS has upgraded the growth outlook as real GDP accelerates to around a 4 per cent annual rate in the fourth quarter of last year. Australian growth has been revised higher to 2.8 per cent in 2018 and 2019 from 2.7 per cent, snapping a downgrade cycle. "Last year Australia unusually lagged the global recovery. But importantly, a further improvement in the global outlook has finally been coupled with some lift in domestic activity data," writes economist George Tharenou. Real growth in Australia was 2.3 per cent in 2017. "Stronger global growth is supporting commodity prices, exports, business conditions, capex intentions, and jobs; but consumption remains capped by record low wages and a housing market that has peaked."

Big dollar

RBC Capital Markets' chief US economist, Tom Porcelli, argues the FOMC sounded a touch more hawkish after its latest meeting where rates were kept on hold in the US, as expected. Two changes he identifies to support that view are new language around inflation, and the insertion of "further" into the rates profile. The statement revised its phrasing to acknowledge that inflation will "move up" this year. "From our lens this is a reality," the economist says, pointing to the discounting in mobile phone plans of last year falling out of the equation in the next few months. Food inflation and higher energy prices are consistent with this trend. The Bloomberg Dollar Spot Index declined 0.2 percent.

Stacked

Oil prices rebounded from earlier losses to end higher on Wednesday, after the US Energy Department said oil inventories rose for the first time in nearly three months, but was offset by strong demand for gasoline and distillate products and news that OPEC countries maintained heavy supply cuts in January. Crude oil futures ended higher for the fifth straight month, with US futures gaining 7.7 percent in January, the best month for the contract since September. OPEC members cut output by 1.8 million barrels a day until through the end of 2018, and a Reuters survey on Wednesday showed the members of the cartel achieved a 138 percent supply cut.

Lost and pound

Sterling rose against the dollar on Wednesday as the sell-off in the US currency resumed, putting the pound on track for its best monthly performance since May 2009, thanks to dollar weakness and better prospects for a Brexit deal. Broad dollar weakness also helped the pound shake off news that European Commission officials had rejected the City of London's proposal to strike a post-Brexit free-trade deal on financial services. Sterling has climbed more than 5 percent since the start of the year as the U.S. currency has weakened broadly and as investors have become optimistic about Britain's economy and the prospect of a Brexit deal that is more favourable to the UK.

Stock watch: Ausdrill Limited

Deutsche Bank has raised its target price for Ausdrill shares to $2.90 from $2.37 on earnings upgrades. Ausdrill is on track for a "strong" 2017-18 driven by its African mining business and recovering Australian activity. In fact, the broker is so bullish on its African business that it anticipates contract wins over the remainder of this financial year. This appears to be reflected in Ausdrill's "high" market multiple of 17.3 times 2018-19 earnings. But the valuation is justified by equity dilution, and declining to factor in contract awards until confirmed, "however as our scenarios highlight earnings upside from new wins and margin recovery is material" Deutsche Bank says. By factoring in African contract wins equivalent to $100 million in annual revenue, earnings per share stand to increase by 40 per cent versus the broker's old forecasts. Shares of Ausdrill were trading at $2.80, up 7 per cent on Thursday.

With Reuters