Asian shares gain on continued reaction to Fed, BoJ holds steady

Investing.com - Stocks in Japan and Australia led Asia higher for a second day on Friday, as investor confidence continued to be bolstered by expectations the U.S. is in no rush to raise interest rates.

Buying was returning to the region despite a further slide in oil prices overnight. The Nikkei 225 was up 1.8%, while Australia's S&P/ASX 200 gained 2.0% after the Bank of Japan on Friday voted to hold monetary policy stable in an 8 to 1 board vote, maintaining a pace to buy ¥80 trillion of government bonds annually.

Elsewhere, the Hang Seng Index was up 1.4% and the Shanghai Composite Index was up 0.5%.

Stocks in the mainland have been largely shielded from the worries abroad, rallying 23% since China's central bank surprised markets in November with an interest-rate cut, including a week-to-date gain of 4.6%.

Overnight, U.S. stocks carried Wednesday's gains into a strong rally on Thursday as investors continued to applaud the Federal Reserve's commitment to be patient when deciding when to hike interest rates.

At the close of U.S. trading, the Dow 30 rose 2.43%, the S&P 500 index rose 2.40%, while the Nasdaq Composite index rose 2.24%.

The Federal Reserve said on Wednesday it was leaving its benchmark interest rate unchanged at 0.00-0.25% and added it will exercise patience when raising interest rates to make sure the economy continues to improve.

In past statements, the Fed said it would take "considerable time" to make sure recovery is underway before tightening policy.

In Wednesday's statement, the Fed left in that dovish phrase, though the context of the language suggested that the "considerable time" wordage applied to past statements, leaving markets to conclude that even though rate hikes are on the way, monetary authorities will be patient when acting.

The Fed's language sparked a massive rally on Wall Street by fueling expectations that borrowing costs will remain low for some time to come while economic fundamentals continue to improve and bolster corporate top and bottom lines.

Upbeat data out of the labor market drew applause as well.

The U.S. Department of Labor reported earlier that the number of individuals filing for initial jobless benefits in the week ending Dec. 12 fell by 6,000 to 289,000 from the previous week’s revised total of 295,000. Economist had forecast an increase of 1,000.

Elsewhere, manufacturing activity in the Philadelphia-region slowed in December after expanding at the fastest rate since December 1993 last month, according to data released on Thursday.

The Federal Reserve Bank of Philadelphia said its manufacturing index came in 24.5 at this month, down from 40.8 in November.

Economists had forecast a decline to 26.6.

On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.