ASIA MARKETS: Big Gains In Asian Stocks After Fed Holds Pat

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 more than 7% in early trade, though the advance was later pared to a 4.6% gain late in Asia, Thailand rose 3.3%, while the Philippines ended up 2.8% at 6511.70.

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) gaining as much as 2.4%.

There was also some relief in terms of bond yields, with the Indonesia 10-year government dollar bond yield falling to 5.08% from 5.43% on Wednesday, while Philippines nine-year government dollar bond yield fell to 3.44% from 3.72%.

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 1.8% to 14766.18 and Australia's S&P/ASX 200 rose 1.1% to 5295.70, after hitting a high of 5300.10 earlier in the session. Singapore's Strait Times index added 1.9% and Hong Kong's Hang Seng rose 1.7% to 23502.51.

The Australian dollar (AUDUSD) was trading at US$0.9513, close to a high it reached overnight, while the yen (USDJPY) softened to Yen98.59 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 closer 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 10.3% since the end of August and Thailand's SET is up 14.7% so far this month.

Regional gold miners jumped after gold knocked 4.2% higher overnight after the Fed move, with Newcrest Mining up 7.9%, Zhaojin Mining Industry surging 12% and Zijin Mining Group higher by 10.4%.

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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