The Hang Seng Index in Hong Kong HSI, +0.38% was last up 0.4%, Korea’s Kospi SEU, +0.67% ended 0.7% higher, while Australia’s S&P/ASX 200 XJO, +0.65% closed up 0.7% and the Shanghai Composite Index SHCOMP, +0.54% closed at 0.5%. The Japanese share market was closed for a public holiday.
The Bank of Japan and Federal Open Market Committee moves sent the equities market into “a risk-on mood,” said Hongwei Lee, a sales trader at Saxo Bank.
The Federal Reserve opted to hold its key short-term interest rate steady on Wednesday. Asia-based traders welcomed the news, as a rate rise would have pulled money out of emerging markets.
Fed officials also cut their 2016 growth forecast for the U.S. economy to 1.8%, from a 2.0% projection in June, and lowered their long-term view on the growth rate to 1.8% from 2%.
After the Fed’s decision, a senior South Korean finance ministry official warned it could take action against the won’s rapid gains against the dollar. The won KRWUSD, +0.006342% rose sharply against the U.S. dollar at the start of Asian trade, but pulled back to trade flat.
“The won shows an excess of volatility,” said Hwang Kunil, director-general of the ministry’s International Financial Policy Bureau. The government “will take appropriate measures, if necessary,” he said.
Some in the market were caught off-guard by the strength of Asian markets’ reaction to the Fed.
“It took me a bit by surprise,” said Daniel So, a strategist China Merchants Bank International Ltd. “Of course it is good news for the financial markets in the short term, but the market has expected this and the interest rate risk hasn’t gone away.”
Despite the dissent of three of the more hawkish FOMC members, the view that a rate increase will arrive by the end of the year appears solid. According to Chicago Mercantile Exchange’s FedWatch tool, there is a 59.3% chance of a change in interest rates at the December meeting, a touch higher than the previous day’s probability.
Federal Reserve Chairwoman Janet Yellen laid out the rationale for the lack of action.
The Fed’s move followed an announcement Wednesday by the BOJ, which has struggled for nearly two decades to bring about steady inflation, that it left unchanged its negative interest rate on excess deposits with the central bank. It also said it would introduce a 10-year interest-rate target—action that amounted to a commitment to steepen the government-bond yield curve.
Elsewhere, oil and metals prices rose strongly as U.S. inventory data showed domestic crude inventories at the lowest level since February and the dollar softened.
The global Brent crude benchmark LCOX6, +0.75% gained $0.45 to trade at $47.28 a barrel, while copper and aluminum rose 0.9% and 1.3%, respectively. The gains supported stocks exposed to the commodities. In Australia, BHP Billiton BHP, +2.70% closed up 2.7% and Rio Tinto RIO, +3.25% ended 3.4% higher.
On Singapore’s FTSE Straits Times Index STI, -0.16% , Secura Group 43B, +6.47% surged 5.9% after the security services provider announced it had won a contract worth 7.9 million Singapore dollars to provide unarmed guards and other security services to Z77, +0.25% SingTel, Singapore’s biggest telecommunications firm. The company now has an order book of S$27.7 million, it said. Secura outperformed the broader index’s 0.4% decline.
Looking ahead, investors will be watching out for U.S. employment data later Thursday, something that could trigger market tremors if the data offers clues as to the likelihood of a December rate increase by the Fed.