Asian stocks jumped to a four-month high, bond yields and credit risk declined while industrial metals rallied after the Federal Reserve unexpectedly refrained from reducing U.S. economic stimulus. The Thai baht strengthened the most in six years.
The MSCI Asia Pacific Index climbed 1.9 percent as of 12:20 p.m. in Tokyo, set for the highest close since May 22. Standard & Poor’s 500 Index futures added 0.1 percent after the measure rose 1.2 percent to a record yesterday. Australian 10-year bond yields fell the most in more than six weeks. Copper jumped 1.6 percent and oil advanced 0.4 percent. The baht gained 2 percent, the Indian rupee surged 2.5 percent and the Malaysian ringgit was up 2.2 percent.
The Federal Open Market Committee said it wants more evidence of an economic recovery before paring its $85 billion-a-month bond buying program, surprising analysts who predicted a $5 billion cut to Treasury purchases. Japan’s exports rose the most since 2010 in August, boosting Prime Minister Shinzo Abe’s growth drive.
“It’s taper off, risk on,” said Keith Poore, head of investment strategy at AMP Capital Investors Ltd. in Wellington, which manages about $130 billion. “You want to hold on to your risk positions if you have them at the moment.”
Fed Chairman Ben S. Bernanke said there is no fixed schedule for tapering and it could still start this year should data confirm the central bank’s “basic outlook.” The U.S. will post jobless claims and home sales figures today. Economists had forecast the FOMC would dial down monthly Treasury purchases to $40 billion from $45 billion and keep buying of mortgage-backed securities at $40 billion, according the median of estimates compiled by Bloomberg.
Indonesia’s stock gauge surged 4.5 percent, the Philippine Composite Index jumped 3 percent, while the Hang Seng index rallied 1.7 percent. Tokyo’s Topix Index climbed 1.2 percent. Australia’s S&P/ASX 200 Index (AS51) rose 1 percent to the highest since June 2008.
Raw-material producers posted the largest gains among the 10 industry groups on the MSCI Asia Pacific index. BHP Billiton Ltd., the world’s largest mining company, rose 1.8 percent. Rio Tinto Group, the second-biggest, advanced 3.1 percent and Newcrest Mining Ltd. jumped 7.5 percent. Mainland Chinese, Taiwanese and South Korean markets are closed today.
Yields on Australian bonds due in a decade fell 18 basis points, or 0.18 percentage point, to 3.88 percent, set for the biggest one-day drop since Aug. 5. Similar-maturity Japanese notes yielded 0.675 percent, down three basis points.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 14.5 basis points to 114.5 basis points, Australia & New Zealand Banking Group Ltd. prices show. The decline is the biggest one-day drop since November 2011, according to data provider CMA.
The baht rose to 31.04 a dollar, the rupee climbed to 61.79 and the ringgit strengthened to 3.1635, set for the steepest one-day advance since June 2010. The offshore yuan rose as much as 0.1 percent to a record 6.1042 per dollar in Hong Kong.
“The fact that the money train will continue for a while means the risk of a hard-landing or a balance of payments crisis has been greatly reduced, if not averted,” Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong, wrote in a note today.
Copper for delivery in three months on the London Metal Exchange reached $7,305 a metric ton, the highest level since Aug. 28. Stockpiles monitored by the LME fell for the 10th straight session. Nickel climbed a second day, jumping 2.4 percent, while zinc and aluminum rallied at least 1.3 percent each. Gold was down 0.3 percent at $1,359.15 an ounce after surging 4.1 percent yesterday, the most since June last year.
West Texas Intermediate crude oil rose to $108.53 a barrel, after snapping a three-day drop yesterday. The Fed fueled gains already triggered by a U.S. Energy Information Administration report showing oil stockpiles fell 4.37 million barrels to 355.6 million barrels last week. Inventories were forecast to decline 1.2 million barrels, according a Bloomberg survey of analysts.
New Zealand’s currency gained 0.4 percent to 83.99 U.S. cents. The nation said today that gross domestic product grew 2.5 percent in the three months through June 30 from a year earlier, beating the median forecast of 2.3 percent in a separate survey.