Asian Equities Higher on Earnings Optimism

Asian shares advanced to one-month highs on Wednesday, helped by Wall Street which gained on optimism over corporate earnings and prospects the U.S. Federal Reserve will reaffirm its willingness to wait longer before raising interest rates.  MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.7 percent, led by a 1.2 percent rise in South Korean shares while Japan’s Nikkei share average rose 1.4 percent.

U.S. stocks rose more than 1 percent on Tuesday, with the S&P 500 coming less than two percent below its record peak set last month.  The Fed is widely expected to announce on Wednesday it will end its two-year-old bond-buying stimulus, known as quantitative easing three, as the U.S. economy continues to recover.

Still Fed officials have also stressed they are in no hurry to take policy tightening a step further by raising rates from near zero levels due to subdued inflation and the poor quality of a recovery in labor markets.  “I think the markets are greatly underpinned by expectations that the Fed will maintain a dovish stance, which makes me a bit worried about risk of disappointment,” said Hirokazu Kabeya, senior strategist at Daiwa Securities.


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