Relieved investors sent shares soaring across the world yesterday after a surprise decision by the United States Federal Reserve to keep its money-printing programme intact.
Wall Street saw record highs on Wednesday, with more gains expected overnight, while other bourses also rallied.
Singapore shares jumped 1.8 per cent to their highest in more than a month, while Hong Kong gained 1.7 per cent and Tokyo rose 1.8 per cent. The surge was sharper in emerging markets, with Bangkok adding 3.5 per cent and Jakarta up 4.7 per cent.
European markets rose as well last night, while many currencies soared against the greenback.
"No one saw this coming," said Mr David Harris, a fund manager at Schroders in the US. In Singapore, Mr Jed Laskowitz, chief executive for the Asia-Pacific at JPMorgan Asset Management, noted: "It's a sea of green around the world after the Fed's surprise decision not to do anything."
The Fed has decided to keep up its money-printing stimulus measures, which basically guarantees that billions of dollars will continue flowing into the region.
The move stunned market watchers - the Fed had previously hinted it would ease back on, or taper, the US$85 billion (S$107 billion) a month programme.
On Wednesday, it said the US economy was not strong enough to weather a reduction in the programme. "Conditions in the job market today are still far from what all of us would like to see," said Fed chairman Ben Bernanke after a policy meeting.
He said "there is no fixed calendar schedule" and the stimulus slowdown "could begin later this year" if economic data is healthy.
The decision was a shot in the arm for investors, from small-time retail players to major fund managers. They snapped up stocks and emerging-market currencies after having sold them off last month for fear of tapering.
The prospect of more US dollars flooding the globe drove the greenback down 1.1 per cent against a basket of currencies.
It was down 1.1 per cent against the Singdollar, at S$1.2449 to US$1, and off a whopping 2.4 per cent against the ringgit, hitting RM3.1565 to US$1 - its steepest drop since the Asian financial crisis in 1998. It fell 1.8 per cent against the rupiah, clocking in at 10,870 rupiah to US$1.
Investors switched to gold, sending the price up 5 per cent to US$1,362 an ounce. Oil also gained, with Brent crude up more than 2 per cent at US$111 a barrel.
Still, analysts warned markets might collapse again - as they did in June and last month - the next time the Fed hints at tapering.
"There is now clearly greater uncertainty than before," said Mr Michael Every, who heads financial research for the Asia-Pacific at Rabobank.
The delay in tapering is "postponing the inevitable", said local remisier Desmond Leong.