Asian markets extended their gains Friday on the lingering effects of the Federal Reserve's lower interest rate outlook, but Tokyo stocks sank as a surging yen crippled Japan's exporters.
The Fed's decision Wednesday to scale back its forecasts on hiking borrowing costs -- citing global turmoil and weak growth -- was greeted with relief across most trading floors on Thursday, with shares rallying from Asia to the Americas.
It also provided a boost for emerging market currencies and sent the dollar tumbling, which in turn provided a boost to dollar-priced crude oil, with both main contracts surging above $40.
And the positive trend continued Friday, with most equities markets and emerging currencies pushing on with more gains.
"Markets are still settling down after the more-dovish-than-expected Fed," Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a note to clients.
"It appears (Fed policymakers) have become more concerned with the outlook for the global economy," he said, according to Bloomberg News.
Hong Kong ended up 0.8 percent, Shanghai closed 1.7 percent higher and Sydney gained 0.3 percent by the end. Seoul, Singapore, Taipei and Manila also enjoyed healthy advances.
However Tokyo finished 1.3 percent lower as the yen pushed towards levels not seen since late 2014 with the prospect of low US returns and dim global growth making the safe-haven Japanese unit more attractive.
In early European trade London and Frankfurt added 0.1 percent each and Paris was 0.2 percent higher.
- Oil above $40 –
The dollar fell to 110.82 yen at one point in Tokyo Friday before recovering to 111.30 yen. But that is well off the 113.71 yen in before the Fed's announcement Wednesday.
The strength of the yen has rattled Japanese central bankers who in January announced a shock decision to take interest rates into negative territory as they struggle to kickstart inflation and economic growth.
"There’s concern for exporters’ earnings," Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. in Tokyo, said.
"If the yen’s trading around 114 to the dollar than companies will expect profits next fiscal year, but when it's 110, most exporters will post losses."
The greenback also retreated further against higher-yielding units, with the South Korean won up one percent, Australia's dollar 0.4 percent higher and the Malaysian ringgit 0.1 percent higher. The Taiwan, New Zealand and Singapore dollars were also up.
On oil markets the main US benchmark West Texas Intermediate held on to gains above $40, which it broke above Thursday for the first time this year as the weaker dollar made it cheaper for holders of other currencies.
WTI was up 0.1 percent and Brent added 0.2 percent.
Crude has seen huge buying interest since Wednesday as the world's key producers led by Russia and Saudi Arabia agreed to hold talks next month to address a supply glut that has depressed prices for almost two years.
- Key figures around 0810 GMT –
Tokyo - Nikkei 225: DOWN 1.3 percent at 16,724.81 (close)
Shanghai - composite: UP 1.7 percent at 2,955.15 (close)
Hong Kong - Hang Seng: UP 0.8 percent at 20,671.63 (close)
London - FTSE 100: UP 0.1 percent at 6,206.07
Euro/dollar: UP at $1.1288 from $1.1317 on Thursday
Dollar/yen: DOWN at 111.30 yen from 111.44 yen
New York - Dow: UP 0.9 percent at 17,481.49 (close)