Most Asian equity markets rallied Thursday after comments by the US Federal Reserve cooled expectations of an early rate hike, while the euro and yen retreated against the dollar after racking up big gains in New York.
While the US central bank opened the door for a rise after six years of zero percent rates, it lowered its forecasts for economic growth and inflation and stressed it would remain cautious before making any move.
News that the Fed is in no hurry to depart from the loose monetary policy that has supported shares sent Wall Street surging, providing a strong platform for Asian indexes.
At the close of trade Sydney was 1.86 percent higher, adding 108.5 points to 5,950.8 while Seoul ended up 0.47 percent, or 9.44 points, at 2,037.89.
Hong Kong rallied 1.45 percent, or 348.81 points, to 24,468.89.
However, Tokyo sank 0.35 percent, or 67.92 points, to close at 19,476.56 as exporters were hurt by the strengthening yen. Shanghai retreated 0.31 percent in late trade after rising almost nine percent in a six-session winning streak.
After a two-day policy meeting, the Fed issued a statement that removed a pledge to remain “patient” on raising interest rates, signalling a possible mid-year rate increase.
But bank chair Janet Yellen stressed growth prospects were more muted than three months ago, despite strong increases in jobs creation. She noted consumer spending has slipped, inflation has declined, wages are flat, and the stronger dollar has hurt US exports.
The policy committee lowered its rate outlook to 0.5-0.75 percent for the end of this year, from 1.0 percent previously, while also reducing its 2016 forecast to 1.75-2.5 percent from 2.5 percent.
“Just because we removed the word patient from the statement doesn’t mean we’re going to be impatient,” Yellen told reporters.
– Dollar fights back –
The news sent the dollar tumbling and provided much-needed relief for the euro, which has been hammered by the European Central Bank’s new stimulus programme.
However, on Thursday the greenback began to recover, buying 120.65 yen against 120.09 yen in New York, although it is still well down from the 121.35 yen level in Tokyo earlier Wednesday.
The euro changed hands at $ 1.0685 against $ 1.0871, but is well up from the $ 1.059 earlier Wednesday.
At one point in New York the dollar had tumbled to 119.57 yen and the euro was at $ 1.101.
“It’s difficult to see rate hikes in June, and I expect the timing to keep being pushed back,” Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo, told Bloomberg News.
“Looking at the US’s inflation rates, and the fact that wages haven’t risen despite the good headline jobs numbers, the US is not in a state to hurry into rate hikes.”
Also in New York, the Dow climbed 1.27 percent, the S&P 500 jumped 1.21 percent and the Nasdaq advanced 0.92 percent.
Oil prices were lower in Asian trade after jumping in New York in reaction to the Fed news. US benchmark West Texas Intermediate for April delivery shed $ 1.46 to $ 43.20 while Brent crude for May fell 74 cents to $ 55.17.
On Wednesday WTI gained $ 1.20 in US trade and Brent climbed $ 2.40.
Gold fetched $ 1,164.38 against $ 1,153.82 late Wednesday.
In other markets:
— Mumbai fell 0.53 percent, or 152.45 points, to end at 28,469.67.
Axis Bank fell 2.50 percent to 564.10 rupees, while Gas Authority of India Limited rose 2.19 percent to 390.05 rupees.
— Singapore rose 0.73 percent, or 24.41 points, to 3,386.16.
Oversea-Chinese Banking Corporation gained 1.27 percent to Sg$ 10.36 while oil rig maker Keppel Corp rose 0.81 percent to Sg$ 8.69.
— Bangkok was flat, edging up 0.04 percent, or 0.63 points, to 1,532.13.
Kasikorn Bank rose 1.77 percent to 230.00 baht, while Siam City Cement fell 1.00 percent to 396.00 baht.
— Kuala Lumpur’s main index closed 0.64 percent, or 11.56 points higher, at 1,809.13.
Public Bank added 0.76 percent to 18.64 ringgit, Sime Darby rose 0.22 percent to 9.30, while Tenaga Nasional lost 0.55 percent to 14.58 ringgit.
— Jakarta ended up 0.75 percent, or 40.70 points, at 5,453.85.
Auto giant Astra International rose 0.94 percent to 8,050 rupiah, while Matahari Putra Prima, which runs a variety of shops, lost 3.75 percent to close at 4,230 rupiah.
— Taipei added 0.86 percent, or 83.30 points, to 9,736.73.
Smartphone maker HTC climbed 1.07 percent to Tw$ 141.5 while Taiwan Semiconductor Manufacturing Co. was 0.33 percent higher at Tw$ 154.0.
— Wellington rose 0.22 percent, or 12.74 points, to 5,859.40.
Air New Zealand was up 0.71 percent at NZ$ 2.82 and Chorus lifted 1.56 percent to NZ$ 2.93.
— Manila closed 0.75 percent higher, adding 57.97 points to 7,814.55.
Philippine Long Distance Telephone rose 2.22 percent to 2,850.00 pesos and Ayala Land gained 1.47 percent to 37.95 pesos, while Alliance Global Group advanced 2.06 percent to 27.20 pesos.
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