STI up 0.7% on dovish Fed stance

Singapore - Relief that the United States central bank is not in a hurry to raise interest rates gave the stock market here a much-needed boost.

The Straits Times Index (STI) rose 24.4 points or 0.7 per cent to end at 3,386.16, which was also the intra-day high.

Shares opened higher and were never in danger of slipping into the red. Turnover was $1.2 billion with 1.2 billion shares traded.

A surprisingly dovish stance was adopted by the Federal Reserve following its latest monetary policy meeting in which it acknowledged that growth prospects were not as optimistic as before.

It led Fed chair Janet Yellen to take pains to reiterate the central bank will not be impatient about raising rates even though it dropped the pledge to be "patient" in its statement.

Giving the dovish camp more ammunition to rejoice was the downward revision by policy members of the year-end Fed fund rate from 1.125 per cent to 0.625 per cent.

Most Wall Street banks now expect the Fed to wait until September before the first rate hike is made, later than initial projections for a liftoff in June.

Most Asian bourses were buoyed by the Fed statement, which keeps monetary conditions loose in the world's largest economy, a critical factor that has enabled the bull run to continue for six years.

Hong Kong jumped 1.5 per cent, Shanghai added 0.1 per cent, Seoul gained 0.5 per cent, but Tokyo was down 0.4 per cent.

Japanese exporters were hit by a stronger yen as the Fed decision put a halt to the surging greenback's rise.