Asian stocks outside Japan rose for sixth day, with the regional gauge heading for a two-week high, after the Federal Reserve kept US interest rates steady and scaled back expectations for increases in 2017.
The MSCI Asia Pacific Excluding Japan Index climbed 1.2 per cent to 455.3000 by 9.30am in Hong Kong, heading for the highest since September 9th.
Japanese markets are closed on Thursday for a holiday after equities rallied to a three month high on Wednesday when the Bank of Japan tweaked its stimulus policy.
Fed officials said the case for higher interest rates has strengthened, but they decided “to wait for further evidence of continued progress” toward the central bank’s objectives.
"We've seen a gradual decline in where they see the Fed funds rate over the long term," Frances Donald, senior economist at Manulife Asset Management, which oversees about $334 billion, told Bloomberg.
"They kind of teed up that December interest rate hike. In Japan, markets are somewhat relieved" by the BOJ's policy tweaks. Traders have been losing faith in the Fed's ability to diverge from the looser monetary policy stance of central banks in Europe and Japan amid evidence of inconsistent strength in the world's largest economy.
While the central bank is predicting a rate increase by year-end, officials expect two increases next year, down from three projected in June. Australia’s SandP/ASX 200 Index advanced 0.8 per cent.
New central bank governor Philip Lowe said his colleagues have not been "nutters" when it came to achieving their inflation target and reiterated the importance of elevating financial stability in policy making.
New Zealand’s SandP/NZX 50 Index was up 0.5 per cent. The nation’s central bank kept interest rates unchanged on Thursday but said it expects to cut them again to return inflation to target.
