Stocks, emerging market currencies and oil all rallied in Asia yesterday after Federal Reserve chief Janet Yellen lowered expectations for US interest rate hikes this year.
In a statement following the Fed’s latest policy meeting, Yellen cited concerns about the impact on the US economy of recent turmoil in global markets, weakness in China and Europe, and the plunge in crude prices.
Her comments came after the central bank cut its outlook for US growth for this year and painted a picture of the economy that was less upbeat than many had expected.
Crucially it forecast a slower pace of interest rate rises than foreseen in December, when it announced its first hike in almost a decade.
Yellen said policymakers had opted for “a slightly more accommodative path” given “soft” US business investment and weak exports in recent months. The prospect of rates staying at ultra-low levels for some time boosted US shares, gains that extended into Asian trade.
Hong Kong added 1.2% and Shanghai also put on 1.2%, while Sydney ended up 1% and Seoul was 0.7% higher. Singapore added 1% and Manila rallied almost 2%.
However, Tokyo succumbed to late selling to end 0.2% down.
The dollar tumbled to 111.84 yen yesterday, down from 112.57 yen in New York.
The euro jumped to $1.1249 Thursday from $1.1226 in US trade and well up from the $1.1090 in Tokyo on Wednesday.
The dollar plunged against emerging currencies, with the South Korean won up 1.7%, the Australian dollar 2.3% higher, Indonesia’s rupiah put on 1.4% and the Thai baht was 0.6% higher.
There were also sharp gains for the New Zealand dollar and Singapore dollar. The oil-dependent Malaysian ringgit rallied 1.3%.
On oil markets, US benchmark West Texas Intermediate surged almost 6% on Wednesday and Brent more than 4% as the weaker dollar makes the commodity cheaper for clients using other currencies. In afternoon trade yesterday WTI added 2.2% and Brent 1.3%.  Adding to buying sentiment was news that key producers including Saudi Arabia and Russia will hold a meeting next month to discuss output levels, with hopes they will agree a freeze.  The jump in crude boosted energy firms, with Hong Kong-listed CNOOC up more than 5% and PetroChina 4.4% higher.
In Sydney, Rio Tinto gained 2.4% and BHP Billiton was also up 2.4%.