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Abu Dhabi, UAETuesday 11 December 2018

Markets riding high in Asia

US optimism over inflation spurs rallies across the board except China

Tthe Tokyo Stock Exchange . Stocks are rising. Kazuhiro NOGI / AFP
Tthe Tokyo Stock Exchange . Stocks are rising. Kazuhiro NOGI / AFP

Stocks, bonds and commodities were all on a roll in Asia on Thursday, as bulls scented a softening in the Federal Reserve's confidence on inflation that promised to keep US interest rates low for longer than some had expected.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS climbed 0.9 per cent to heights not seen since December 2007. It has gained over 5 per cent so far this month.

South Korea and Japan's Nikkei both added 0.2 per cent, while Australia put on 0.3 per cent. Stocks in the Philippines were at a one-year peak and Hong Kong's Hang Seng index added 0.3 per cent to push above 27,000.

But worries about tighter regulations nudged China's blue-chip CSI300 index down 0.7 per cent, though data showed a pick up in profit growth for industrial firms.

The latest rush for risk came after the Fed left US rates unmoved as expected on Thursday, and tweaked its wording on inflation.

The market seized on the fact that the central bank noted that both overall and core inflation had declined, and it removed the qualifier "recently", perhaps suggesting concerns the slowdown might not be temporary.

The Fed also said it expected to start winding down its massive holdings of bonds "relatively soon", cementing expectations of a September start.

Reuters