Most South-east Asian stock markets rose on Thursday, in line with broader Asia, after the minutes of the U.S. Federal Reserve’s last policy meeting signalled a cautious approach to future rate hikes. Fed policymakers agreed they should hold off on raising interest rates until they see evidence that a recent economic slowdown was transitory, the latest indication of the central bank’s heightened caution over policy tightening.
Asian shares scaled two-year highs, with MSCI’s broadest index of Asia-Pacific shares outside Japan advancing 0.7 percent. “Based on the Fed minutes that was released last night, traders are actually pricing in less chances of a rate hike next month,” said Grace Aller, an analyst with AP Securities.
“The less probability of a June rate hike points to soft growth in the United States and encourages a risk-on appetite for investors towards high-growth emerging markets such as in Southeast Asia.”
Singapore shares hit a more than one-week high and were headed for a third straight session of gains, led by financial and real estate stocks. DBS Group Holdings Ltd rose as much as 0.9 percent to its highest in nearly two years, while real estate company CapitaLand Ltd climbed up to 2.8 percent.
The city-state’s gross domestic product grew 2.7 percent in the first quarter from a year earlier and it expects its economy to grow more than 2 percent this year on improving overseas demand. However, the government warned of risks to the outlook from tightening financial conditions in China and policy uncertainties in the United States and Britain.
Malaysian shares rose as much as 0.7 percent, boosted by financials, with CIMB Group hitting a more than two-year high after it posted a 45 percent jump in first-quarter profit on Wednesday. Malayan Banking Bhd and AMMB Holdings Bhd rose 2.2 percent and 3.4 percent, respectively.
Thai shares gained as much as 0.3 percent, heading for a fifth consecutive session of gains, helped by financials. Indonesia was closed for a holiday.