Asian stock markets shot higher on Friday on Wall Street's lead after the Federal Reserve hinted at a pause in US interest rate rises, soothing fears over slowing global growth, dealers said.
They said that while the Fed hiked interest rates by an as expected 25 basis points to 5.25 percent Thursday, it also rewrote its policy statement in a way that raised hopes that an end to its monetary tightening was close.
In the run-up to the Fed decision, the markets had been on tenterhooks as investors turned hot and cold amid endless speculation the US central bank, under new chief Ben Bernanke, would take a hard line on inflation and continue to hike rates for much longer than had been expected earlier this year.
That overhang now seems to have been removed.
"The Fed's comments gave a very strong hint that there will be an end soon to the interest rate hike cycle," said Peter Lai, sales director at securities firm DBS Vickers in Hong Kong. "Investors are very positive, believing the Fed will stop the rate hikes soon," he added.
The markets were now taking the view there may be one more rate rise either in August or September to 5.5 percent and then the Fed would be done.
On the day, that was enough to spark sharp gains across the region, with Tokyo up 2.54 percent, alongside Hong Kong and Seoul, while Sydney put on 1.53 percent. Manila was the best performer, up 4.52 percent.
Taipei
Taiwan share prices closed sharply higher in active trade, rising 1.47 percent on Wall Street's gains after the US Federal Reserve appeared to soften its stance on future interest rate hikes, dealers said.
The easing of concerns over interest rates encouraged the region as a whole, with the market staging a relief rally on the Fed lead and the Taiwan central bank's own modest tightening of monetary policy on Thursday, they said.
The weighted index rose 97.02 points to 6,704.41, off a high of 6,731.07 points, on turnover of NT$115.80 billion (US$3.55 billion).
Risers led decliners 616 to 293, with 110 stocks unchanged.
Dealers said the market is likely to maintain its positive tone in the week ahead, marked with increased volatility due to profit-taking expected at around 6,800 points.
Investors were quick to get into the market, building on Thursday's upturn as they welcomed the Fed's more guarded statement on the outlook for inflation, Fubon Securities Investment Services manager Daniel Tseng (
Tseng said the market should now be on firmer ground, with the uncertainties over interest rates and domestic political problems resolved for the near-term at least.
However, there will be a strong temptation to take profits if the market moves closer to 6,800 points, Tseng added.
Taiwan Semiconductor Manufacturing Co. was up US$1.70 at US$58.40 dollars and United Microelectronics Corp was up 0.40 at US$19.40.
Tokyo
Japanese share prices jumped over two percent, topping 15,500 points for the first time in almost four weeks on hopes that US interest rates are close to peaking, dealers said.
They said the market had taken a widely expected quarter-point interest rate rise by the US Federal Reserve overnight in its stride and cheered signs that the US central bank may be softening its monetary policy stance.
The Tokyo Stock Exchange's benchmark Nikkei-225 index rose 384.03 points or 2.54 percent to 15,505.18 by the close, reaching the highest level since June 5 on Wall Street's positive lead. Over the week the index was up 2.52 percent.
The broader TOPIX index of all first-section shares gained 39.21 points or 2.53 percent to 1,586.96. It was up 2.68 percent for the week
Winners beat losers 1,443 to 187, with 65 stocks unchanged.
Volume rose to 1.65 billion shares from 1.43 billion Thursday.
Looking ahead, Mizutani said the Nikkei index will probably test the 16,000 points mark next week if the Bank of Japan's lastest quarterly Tankan survey of business sentiment due tomorrow shows an upbeat view of the economy.
Seoul
South Korean share prices rose 2.54 percent after the latest US Federal Reserve statement was taken to mean the end may in sight for its two-year credit-tightening cycle, dealers said.
They said foreign investors returned to the market as net buyers for the first time since June 7, aggressively picking up large cap IT and financial stocks, while gains overall were broad-based.
The KOSPI index closed up 32.13 points at 1,295.15, just off the high of 1,295.43. Volume was 223 million shares worth 3.6 trillion won (US$3.79 billion). Rises overwhelmed falls by 634 to 141.
Foreign and institutional investors were net buyers of shares worth 201 billion won and 98.4 billion won while retail investors were net sellers of 343.7 billion won.
"The Fed's comments were dovish, signalling a limit to further tightening. That cleared up the possibility of a sudden downturn in the US economy and lifted the uncertainty in financial markets," Hyundai Securities analyst Lee Sang-Jae said.
Samsung Electronics rose 13,000 won to 603,000.
Hong Kong
Hong Kong share prices closed 2.54 percent higher and back above the key 16,000 points level as interest rate worries eased after the US Federal Reserve's statement overnight suggested it has softened its stance on monetary policy, dealers said.
They said sentiment was also boosted in late trade after major banks HSBC, Hang Seng Bank and Bank of China said they were keeping their prime lending rates unchanged despite a the 25 basis points rate hike by the Fed.
The market was additionally supported by end-June short-covering and window-dressing activity.
The Hang Seng Index closed up 402.40 points at 16,267.62, off a high of 16,273.74. For the week the index was up 458.81 points or 2.90 percent.
Turnover was heavy at HK$40.52 billion (US$5.2 billion).
"The decision of HSBC and Hang Seng Bank to keep their prime rates unchanged, coupled with indications from the Fed of a possible delay in the next rate increase, helped improve buying sentiment significantly," said Howard Gorges, vice chairman at South China Securities.
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