Asian Stocks Outside Japan Advance as Fed Stands Pat on Rates

  • Yellen reinforces that pace of rate increases will be gradual
  • Chinese stocks rise, paring weekly loss, after housing data

Asian stocks outside Japan rose, with a regional gauge heading for a one-month high, as health-care stocks led gains after the Federal Reserve’s decision not to raise interest rates eased the risk of capital outflows from developing nations.

Hanmi Pharm Co. surged 11 percent in Seoul. Newcrest Mining Ltd., Australia’s biggest gold producer, jumped 6.9 percent in Sydney as bullion headed for its first weekly advance in four weeks. Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. fell at least 1.9 percent in Tokyo after the lenders’ credit rating was cut by Standard & Poor’s following its downgrade of Japan.

The MSCI Asia Pacific Ex-Japan Index advanced 1.1 percent to 412.93 as of 4:01 p.m. in Hong Kong. Japan’s Topix index slid 2 percent after the yen gained against the dollar. U.S. rates will remain near zero for at least another month after the Fed’s decision, which showed policy makers are reluctant to end record monetary stimulus at a time when uncertainty over China and other developing nations is roiling global markets. Odds of an increase this year have fallen below 50 percent, with Fed Chair Janet Yellen saying the recent turmoil may restrain the U.S. economy and suppress already slow inflation.

“It’s a supportive outcome for markets and provided a reminder the Fed’s not going to do anything stupid,” Shane Oliver, global strategist at AMP Capital Investors Ltd., which manages $112 billion, said from Sydney. “If you’re overweight equities, you probably say: the Fed’s not going to harm us. It’s quite possible that this gets pushed out further and further, into next year.”

South Korea’s Kospi index increased 1 percent. Taiwan’s Taiex index gained 0.2 percent. Australia’s S&P/ASX 200 Index added 0.5 percent. New Zealand’s S&P/NZX 50 Index rose 0.3 percent. Singapore’s Straits Times Index advanced 0.2 percent. Hong Kong’s Hang Seng Index climbed 0.3 percent.

China Housing

Chinese stocks rose as improving property data boosted developers. The Shanghai Composite Index added 0.4 percent, paring this week’s loss to 3.2 percent, while the Hang Seng China Enterprises Index of mainland stocks traded in the Hong Kong advanced 0.6 percent.

Data released today showed China’s home prices rose in August in half of the 70 cities monitored by the government. Signs of a strengthening real estate market may alleviate some concerns about China’s economy after recent data showed weakness in manufacturing and industrial output.

U.S. Futures

E-mini futures on the Standard & Poor’s 500 Index gained 0.1 percent. The underlying U.S. equity benchmark gauge dropped 0.3 percent on Thursday.

Yellen said most Fed officials still expect a rate increase this year and that the U.S. economy is performing well. She reinforced that the path of rate increases would be gradual. Odds of a hike in October are now at 17 percent, and bets on one in December have slumped to 45 percent, from 59 percent a week ago, according to fed funds futures.

“The reality is that the rate hike is still going to come, whether it’s before the end of the year or in 2016,” Tai Hui, the Hong Kong-based chief Asia market strategist at JPMorgan Asset Management, which oversees about $1.7 trillion, told Bloomberg TV in Hong Kong. “So I don’t believe we’ve cleared anything.”

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