Asian stocks climb after Fed, greenback drops

The Federal Reserve in Washington, DC.
The Federal Reserve in Washington, DC. PHOTO: AFP

SINGAPORE (BLOOMBERG) - Most Asian equities followed US stocks higher, after Treasuries rallied and the US dollar tumbled as the Federal Reserve raised interest rates without accelerating its timeline for future tightening.

Singapore stocks opened 0.6 per cent higher, with STI ticking up 17.86 points to 3,155.29 as at 9.00 am. Gainers outnumbered losers 131 to 24. Shares from Australia to South Korea climbed after the S&P 500 Index jumped by the most in two weeks.

Japanese stocks slipped as the yen strengthened ahead of the Bank of Japan's policy decision Thursday. The yield on 10-year Treasury notes tumbled below 2.5 per cent while gold and oil climbed. The euro rose to a one-month high after Dutch Prime Minister Mark Rutte's Liberals easily beat the anti-Islam Freedom Party of Geert Wilders. The kiwi fell as New Zealand's economy grew less than economists forecast.

The Fed raised its benchmark lending rate a quarter point and continued to project two more increases this year. Equities extended gains as Chair Janet Yellen said in a press conference that the "simple message is the economy is doing well."

Investors anticipated the tightening and Treasury yields had climbed with the dollar on speculation the central bank might signal a faster pace of tightening. Those trades unwound late Wednesday in the US as the Fed indicated it hasn't fallen behind with its efforts to keep inflation in check.

The Bank of Japan is set to keep its rates and yield-curve policy unchanged in its policy decision on Thursday. The Bank of England, the Swiss National Bank, Bank Indonesia and the Turkish central bank are also expected to stand pat.

US President Donald Trump's first budget outline for fiscal 2018 is expected to be released on Thursday. He's said he'll seek a US$54 billion boost in defense spending, paid for by an equal amount of cuts to non-defense agencies.

  South Korea's Kospi jumped 0.9 per cent. Australia's S&P/ASX 200 Index rose 0.4 per cent and New Zealand's S&P/NZX 50 Index increased 0.7 per cent.

Japan's Topix fell 0.3 per cent, dropping for a third straight day as banks and insurers led declines.