Rallying for a third day, the market was led higher by rebounds in resources and financial stocks as the US Federal Reserve buoyed global sentiment.

At 4.15pm (AEDT), the benchmark S & P/ASX200 index was up 127.8 points, or 2.45 per cent, at 5,338.6 points, while the broader All Ordinaries index rose 123 points, or 2.37 per cent, to 5,312.7 points.

Capping off the biggest two-day rise in three years, it was a welcome relief for the sharemarket after a long string of losses, as investors fix their portfolios before the Christmas break, pooling sidelined cash into stocks.

Global markets have risen strongly since the US Federal Reserve indicated early yesterday that it’s confident in the US economy, but in no rush to raise interest rates.

Investment director for Folkestone Maxim Asset Management, Winston Sammut, said today’s rally was the early Christmas present investors had been waiting for.

The rally was partly attributable to the confidence-boosting comments from the US Federal Reserve, and partly because people were rushing off for the holidays and setting up their portfolios, Mr Sammut said.

“A lot of people are finishing up today and are getting their portfolios set up for the break, getting rid of some cash.The funds here have been waiting for a confidence booster, and what’s happened in the US has pushed confidence across the line.

“I was walking around town in Sydney at lunch today and the place is packed with shoppers. The shops are full of people. Presumably they are opening their purses too,” he said.

Chief market strategist for CMC Markets, Michael McCarthy, said investors had been holding cash on the sidelines until the Fed meeting.

“General gloom on growth, a failed Santa rally and oil prices meant traders and investors were short or underweight heading into the Fed’s last meeting for the year,” Mr McCarthy said.

WALL ST: Closes up 2pc

Wall Street stocks were up over two per cent overnight, joining a surge in European markets amid improved sentiment following the Federal Reserve meeting.

Today’s close sees the market end the trading week stronger, with the benchmark index adding 119 points, or 2.29 per cent, over the sessions.

Materials led the market higher, adding 3.09 per cent.

BHP Billiton rose 3.35 per cent to $28.98, while rival Rio Tinto lifted 2.85 per cent to $56.29.

Energy stocks gained 2.35 per cent.

Santos added 0.38 per cent to $7.99, while Woodside Petroleum gained 3.2 per cent to $37.77, while Beach Energy lifted 6.91 per cent to $1.005.

Financial stocks lifted 2.54 per cent as a sector.

ANZ lifted 2.26 per cent to $31.68, while Commonwealth Bank rallied 2.33 per cent to $83.71.

National Australia Bank added 2.93 per cent to $32.66 while Westpac rallied 2.85 per cent to $32.48.

Consumer staples added 1.88 per cent as a sector.

Woolworths added 2.04 per cent to $30.00, while Wesfarmers lifted 1.75 per cent to $41.31.

Meanwhile, Telstra rose 1.2 per cent to $5.89 and Qantas added 3.11 per cent to $2.32.

Business Spectator