The S&P/ASX 200 Index (ASX: XJO) is ending the week with a bang.
After closing up 0.8% on Wednesday and gaining another 0.3% yesterday following Donald Trump's US presidential election win, the ASX 200 is up 1.0% in late morning trade on Friday.
As for some of Australia's biggest listed companies, shares in Commonwealth Bank of Australia (ASX: CBA), Australia's biggest bank stock, are up 0.8% at $148.45 apiece.
Meanwhile, shares in the nation's biggest mining stock, BHP Group Ltd (ASX: BHP), are up 1.6%, swapping hands for $43.68 each.
And ASX 200 biotech giant CSL Ltd (ASX: CSL) is also joining in the rally, with shares up 0.9% at $286.04.
While all of these blue-chip companies have a lot going for them to potentially fuel ongoing growth and strong returns, investors have the US Federal Reserve to thank for at least some of today's strong price gains.
Here's what happened in the US overnight.
Image source: Getty Images
ASX 200 lifts off on more Fed interest rate easing
ASX 200 investor sentiment looks to have gotten a boost after the US Federal Reserve cut the official US interest rate yesterday (overnight Aussie time).
The Federal Open Market Committee's (FOMC) vote was unanimous in reducing rates by 0.25%, lowering the Fed's target range from 4.5% to 4.75%. The Fed said that higher interest rates had seen inflation progress toward its 2% target range, though officials omitted previous language stating the central bank had "gained greater confidence" that inflation was moving sustainably toward its target range.
The overnight rate cut comes less than two months after the Fed delivered its first and much-awaited interest rate reduction of this cycle on 18 September, reducing rates by 0.50% at the time.
The ASX 200 is following the lead of US stock markets, where investors reacted positively to the news by sending the Nasdaq Composite Index (NASDAQ: .IXIC) up 1.5% to another new all-time high. The tech-laden Nasdaq is now up a very impressive 41.3% over 12 months.
The S&P 500 Index (SP: .INX) notched its own new record closing high, ending the day up 0.7% at 5,973 points. This sees the S&P 500 up 36.4% in a year.
By contrast, the ASX 200 may have some catching up to do, with Australia's benchmark index now up 18.8% in 12 months.
Although you should note this figure doesn't include dividends.
The S&P/ASX 200 Gross Total Return Index (ASX: XJT), which includes all cash dividends reinvested on the ex-dividend date, has gained 23.4% in a year.
