Market update: Sentiment buoyed by Yellen’s dovish rhetoric

US markets finished higher yesterday as investors brushed off concerns of a potential slowdown in China. The Dow Jones rose 0.3% to its highest close of the year, while the S&P 500 and Nasdaq closed 0.5% and 0.4% higher, respectively. Investors took comfort from comments by Janet Yellen, the US Federal Reserve's vice chairwoman, that suggested the central bank's aggressive monetary stimulus will continue. At the stock level, the session’s big movers included Yahoo!, which rose 3.5%, and Apple, which fell 2.4%.

Overnight, Asian shares rebounded sharply (Shanghai Composite +2.3%), recovering from Monday’s steep losses. The opening of the National People's Congress (China's once-a-year legislature) was also a supportive influence, after reports that the government will increase spending to rebalance the Chinese economy. Australian stocks also performed strongly, as the Reserve Bank of Australia kept its cash rate at a record low of 3.0%. In early morning trading, European stocks have climbed to a four-and-a-half-year high (FTSE Eurofirst 300 +1.1%). Expectations that central banks’ policies will remain accommodative are outweighing anxieties caused by political uncertainty in Italy. In London the FTSE 100 is also buoyant, up 0.8%.