Most SE Asian stocks rise on dovish Fed; Indonesia leads gains

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(Jan 31): Most Southeast Asian stock markets rose on Thursday on the US Federal Reserve's dovish outlook, with Indonesia hitting a near 11-month high while Philippines erased some of its gains after the country's central bank flagged an acceleration in inflation.

The Fed kept rates at 2.25% to 2.5% on Wednesday as widely expected, which are well below historical averages.

The US central bank also discarded its promises of "further gradual increases" in interest rates, and said it would be "patient" before making any further moves amid signs of global economic slowdown and a damaging trade war with China.

Rising US borrowing costs in 2018 had led to massive capital flight from emerging markets, prompting regional central banks to hike rates to reduce the rate differential and combat a stronger US dollar.

"Markets clearly like the newly dovish Fed, which had exceeded expectations for dovishness in the midst of a positive output gap and tight labor market," Mizuho Bank said in a client note.

Indonesian shares jumped 1.1%, boosted by financial and industrial stocks. The index rose 5.5% in January in its third straight monthly gain.

Bank Central Asia and Unilever Indonesia gained about 2% and 1.9%, respectively.

An index of the country's top 45 liquid stocks climbed 1.5% to its highest since April 2018.

Philippine shares closed 0.3% higher after gaining as much as 1.5% earlier in the session.

The benchmark stock index pared its gains after the central bank said January annual inflation is likely to settle within a range of 4.3% to 5.1%, above its target of 2-4% for 2019.

Surging inflation had dented consumption and put pressure on the peso in 2018, prompting Bangko Sentral ng Pilipinas to hike its benchmark rate five times.

The Philippine stock index added 7.3% in January, in its sharpest monthly gain since March 2016.

Gains in energy and financial stocks helped Thai shares rise about 0.6% to a near 8-week closing high.

Index heavyweights PTT and PTT Exploration and Production climbed 0.5% and 1.7%, respectively.

Elsewhere, Vietnam shares ended 0.6% lower, while Malaysian shares retreated from early gains to close flat.

Change on the day

Market                 Current   Previous close  % move
Singapore              3190.17   3174.38         0.50
Bangkok                1641.73   1632.6          0.56
Manila                 8007.48   7979.95         0.34
Jakarta                6532.969  6464.189        1.06
Kuala Lumpur           1683.53   1684.11         -0.03
Ho Chi Minh            910.65    915.84          -0.57

Change so far in 2019

Market                 Current   End 2018        % move
Singapore              3190.17   3068.76         3.96
Bangkok                1641.73   1563.88         4.98
Manila                 8007.48   7,466.02        7.25
Jakarta                6532.969  6,194.50        5.46
Kuala Lumpur           1683.53   1690.58         -0.42
Ho Chi Minh            910.65    892.54          2.03