Here’s why BHP Billiton Limited has soared today

After heavy declines in recent weeks, this could be the beginning of a strong recovery.

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Shares in BHP Billiton Limited (ASX: BHP) have exploded out of the gates today, trading 96c or 2.72% higher at $36.24 and propelling the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) 1.1% higher. It is the highest the stock has traded in over a week after sinking as low as $35.14 on Friday.

The slight recovery in iron ore price overnight would be one of the primary reasons behind the jump. The commodity rose 1.1% to once again be trading above US$90 per tonne which, although it is still more than 33% below its average 2013 price, may have given investors a glimmer of hope of a price recovery.

Other iron ore miners also reacted positively to the commodity’s jump with Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG) and BC Iron Limited (ASX: BCI) up 2.2%, 3.9% and 2.7% respectively.

Fresh assurances from the Federal Reserve regarding the US recovery are also acting as a strong tailwind for the stock today. The Fed expressed confidence that the nation’s recovery was largely on track and that interest rates would remain low for a “considerable time.”

That’s good news for BHP Billiton’s Australian shareholders who can enjoy the miner’s generous 3.6% fully franked dividend yield in the meantime!

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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