Asia rallies after landmark Fed decision

The effects of the US Federal Reserve's landmark decision were rebounding all over the Asian markets on Thursday, with major indices in the region showing a renewed confidence in the global outlook.

Late on Wednesday, Fed chair Janet Yellen lifted the central bank's target interest rate range to between 0.25% and 0.5%, ending nine years of near-zero conditions.

On the currency markets, the yen was trading at 0.00817 USD as of 11:43 GMT, and the Aussie was at 0.72030.

Tokyo and Shanghai led the equities charge, with the Nikkei Stock Average rising 1.6% and the Shanghai Composite Index gaining 1.6% also. Sydney wasn't far behind, with the S&P/ASX 200 rising 1.4%. In Hong Kong, the Hang Seng reacted with a 0.7% gain, and Seoul's Kospi saw a modest rise of 0.2%.

It ended months of speculation in the Asian markets, which have seen investors keep their cash amid fears of higher borrowing costs. This was especially true for firms in emerging markets, which tend to have high volumes of USD debt.

Southeast Asia in general had been underperforming in recent months. Stocks in countries such as Thailand and Indonesia were down more than 10% this year, and a stronger US dollar weakened emerging market currencies - the Malaysian ringgit was already down 23% in the year to date.

But investors in the region appeared pleased with the Fed's management and communication of this rise.

"The Fed has been very clear in communicating its thinking and the markets clearly appreciated that", said Colonial First State senior investment analyst James White.

The focus was now expected to shift from uncertainty around the Fed, to the programme of rates rises going forward. The Fed had very clearly signalled any rises would be gradual and well-communicated.

When coupled with the stabilising , albeit weaker, growth numbers out of China, things were looking more positive for Southeast Asia next year.

The Federal Reserve was "aware of the risks if they move too quickly. That's the message that investors are focusing on", said Steve Friedman of BNP Paribas in New York. The latest CME poll showed a 55% probability of another rise from the Fed in April.

Previous experience has shown a strengthening Asia after a Fed movement like this one. MSCI's Asia ex-Japan benchmark rose 37% in US dollar terms after the rise in June 2004.

While a strengthening greenback - widely expected amid rate rises - could put more pressure on the region's emerging market currencies, it would also be great news for Asian exporters. Chinese officials weakened the yuan on Thursday for the ninth day in a row, to RMB6.4757 - its weakest level since 2011.

The yuan can trade 2% either side of the loose peg set by authorities in the People's Republic.

Metals were weaker again on Thursday in Asia, though the losses were said to have been offset by the Fed frenzy, said traders. Gold was down 1% to $1065.80 per troy ounce, and three month copper futures fell 0.2% to $4598 per ton.