The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has opened up 0.7%, following strong gains on overseas markets.

In the US, the Dow Jones closed up 1.3%, while the broader S&P 500 added 1.6%. European markets went nuts, with the German DAX Index rising 3.5%, while France’s CAC 40 Index posted a rise of 3.3%. The UK’s FTSE 100 added 1.7%.

Higher oil prices were a feature, with Brent Crude up 1% to SU$40.47, although gold and iron ore both fell. The International Energy Agency said it thinks oil prices may have bottomed as output both in the US and non-OPEC countries was beginning to slow at a fast pace.

Spot gold was down 1.7% to US$1,250 an ounce on Friday, while iron ore lost 1.4% to US$57.09 a tonne.

The Australian dollar is surging higher, currently buying US 75.6 cents.

Leading the way today is Telstra Corporation Ltd (ASX: TLS) – up 2.2% at $5.275 after announcing it was pulling out of a planned joint venture in the Philippines with beer giant San Miguel.

Energy plays Santos Ltd (ASX: STO) and Origin Energy Ltd (ASX: ORG) are up 2% and 1.8% respectively on the back of the oil price gains.

The big four banks Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) are also up.

Despite the strong start, most of the markets will have one eye on the US Federal Reserve, which meets for two days later this week, suggesting we could tread water until we know whether the US will or won’t raise interest rates.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.