ASIA MARKETS: Asian Stocks Rally After Fed Keeps Stimulus

By Daniel Inman

Southeast Asian stocks and currencies rose sharply to lead robust gains across the region as investors returned to emerging markets in droves after the Federal Reserve's surprise move to leave its stimulus measures intact.

Indonesian equities surged 7.4% in early trade, though the advance was later pared to a 4.5% gain, while the Philippines added 2.9% and Hong Kong's Hang Seng rose 1.7%.

The Fed's decision to keep up its bond-buying spree is a green light for global investors, after fears of a change in U.S. monetary policy resulted in a volatile summer for Asia. Markets in India and Indonesia had been hit especially hard because of worries over their slowing economies and trade imbalances just as the fear of a rollback of U.S. stimulus efforts, which had supported these markets for years, prompted substantial outflows.

"Policy makers that were under a lot of pressure because of the prospect of tapering will be celebrating," said Sean Callow, senior currency strategist at Westpac Institutional Bank in Sydney.

Southeast Asian currencies also rallied with Thailand's baht (USDTHB) rising as much as 2.5% against the greenback, while Indonesia's rupiah (USDIDR) rose 2.4%.

The broad-based rally adds to strong gains in the U.S. where the Dow Jones Industrial Average (DJI) closed at a record high and Treasuries posted their biggest one-day price rally since November 2011.

"The Fed did what they should have, not what the markets expected," said Steven Ricchiuto, chief economist at Mizuho Securities.

Japan's Nikkei climbed 1.3% and Australia's S&P ASX 200 rose 0.9% to 5,287.00, after hitting a high of 5,300.10 earlier in the session. Singapore's Strait Times index added 1.7%.

The Australian dollar (AUDUSD) was trading at 95.12 U.S. cents in Asia, close to an overnight high of 95.18 U.S. cents, while the yen (USDJPY) softened to Yen98.16 per dollar, compared with Yen97.93 late Wednesday in New York.

"It is a pretty patchy recovery, and it is a sign that the U.S. is not ready for a reduced stimulus," said Matthew Sherwood, head of investment market research at Perpetual in Sydney.

Japan was also caught up in the declines earlier in the summer, though its recent gains have now put it close to a bull market -- defined as a 20% rise from a recent low.

Thursday's gains cemented strong gains for September, with a number of markets already notching up substantial returns for the month. The Nikkei is up 9.4% since the end of August and Thailand's SET is up 10.9% so far this month.

Regional gold miners jumped after gold knocked 4.2% higher overnight after the Fed move, with Newcrest Mining up 7.5%, Zhaojin Mining Industry rising 7.7% and Zijin Mining Group higher by 6%.

Some markets were unable to react to the Fed developments because of a public holiday, with both Shanghai and South Korea shut until the end of the week.

The Shanghai Composite closed Wednesday up 0.3% and South Korea's Kospi fell 0.4% on Tuesday.

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