HONG KONG — Stock markets across the Asia-Pacific region jumped on Thursday, and many previously battered currencies rose, as investors cheered the news that the U.S. Federal Reserve will not pare back its support of the U.S. economy — at least for now.
The biggest gainers were those that had suffered most from the past months’ exodus of funds from emerging markets. In Indonesia, the region’s worst performer over the past three months, the benchmark stock index had jumped 4.5 percent by midday, and in India, where slowing growth, looming elections and a large current account deficit have helped undermine investor confidence, the Sensex index soared 2.6 percent in early trading.
The relief spread across the entire region, producing gains of more than 3 percent in Thailand and the Philippines, 1.7 percent in Hong Kong, and 1.1 percent for the S.P./ASX 200 index in Australia. In Japan, the Nikkei 225 closed up 1.8 percent.
The markets in mainland China, Taiwan and South Korea were closed for a holiday.
Many of the region’s currencies also rose, with the beleaguered Indonesian rupiah up about 1.5 percent and the currencies of India, Malaysia and Thailand all 2 percent stronger against the U.S. dollar.
European stock markets also were swept higher early on Thursday. The FTSE 100 rose 1.4 percent soon after trading opened in London, and the key indexes in Germany and France both rose 1.2 percent.
“A Fed that is more dovish than expected should be a near-term positive for Asia’s economies,” analysts at Nomura said in a research note on Thursday, as the Fed’s stance should increase net capital inflows, or at least lessen outflows.
Like many other analysts, however, they also cautioned that the Fed’s statement on Wednesday was likely to be only a “short-term positive,” particularly as the timing of a reduction in bond-buying and the sustainability of a recent upswing in China’s economy remained uncertain.
After an initial relief rally over the next few days, “markets will start to fret again about tapering beginning in December. And that won’t be the end of it. Once tapering begins, the next worry will be when asset purchases will end altogether. And then, when rates will rise,” equity strategists at HSBC wrote in a research note. “We see a year or more when equity markets dip (and then recover) each time the Fed moves to (or towards) ending its ultra-easy policy.”
Meanwhile, they added, the delay in the Fed’s “tapering” of its stimulus gives policy makers in Asia a chance to speed up much-needed reforms. “But the risk is that the current surge in equity markets could also bring back complacency.”
Article source: http://www.nytimes.com/2013/09/20/business/global/daily-stock-market-activity.html?partner=rss&emc=rss