Asia: Stocks rally as Fed hints at postponing rate hike until 2016

Asian equity markets rallied on Friday, after the minutes from the US Federal Reserve meeting hinted the central bank could postpone an interest rates hike until next year.

Minutes released on Thursday from the latest Federal Open Market Committee meeting showed the Fed almost hiked interest rates but refrained as a result of the slowdown in China and its potential impact on the US.

According to the minutes, policymakers thought it was more prudent to wait for evidence that the economy had not deteriorated and that inflation would gradually move back toward towards the 2% annual target.

“The minutes reflected more dissent over the cumulative improvements in labor markets than we had anticipated and more than we had observed in the past,” analysts at Barclays said in a note.

“A few members noted that underutilization in labor markets had been eliminated but some others believed that further progress was possible before labor market conditions would be consistent with the committees’ mandate of full employment.”

The news boosted Asian stocks, with Hong Kong’s Hang Seng Index rising 0.46%, while the Shanghai Composite climbed 1.27%, extending gains from the previous session.

“Chinese stocks are still rising on hopes of more government intervention to bolster a slowing and troubled economy while the Fed holding off means no start of a post-crisis rate rise normalisation cycle which many worry could stifle global growth,” said Michael Van Dulken, head of research at Accendo Markets.

Japan’s Nikkei Stock Average rose 1.64%, nearing its highest level in almost a month, while Australia’s S&P/ASX 200 clinched its fifth consecutive day of gains as it rose 1.33%.

Energy and oil stocks were among the main drivers behind the S&P/ASX 200’s strength, with Santos jumping 8.55% to take its weekly gains to 43%, while Woodside Petroleum advanced 2.6% and extended its weekly rally to 10%.

On the currencies front, the yen declined 0.28% against the dollar, while the Australian dollar surged 1.02% against its American counterpart.

Elsewhere, the Malaysian ringgit jumped 1.66% against the greenback, as the dollar traded as low as 4.14 ringgit during the session, its lowest level against the Malaysian currency in almost a month.