Asian stocks and emerging market currencies rallied Thursday after minutes from the Federal Reserve showed growing confidence in the US economy, ramping up the chances of a December interest rate hike.
"Most participants" at the US central bank's October policy expected conditions to be right by their next meeting, having broadly dropped their worries about the global economy and recent market turmoil, the minutes said.
Fed chief Janet Yellen had said earlier in the year she expected an increase by 2016 but a hike was put off several times during the summer as world markets were hammered by worries about China and the global outlook.
But a string of figures out of Washington recently -- particularly on jobs growth and price rises -- coupled with an uptick on equities markets, has reignited confidence at the Fed to lift rates for the first time in nine years.
Also, a number of Fed policymakers were concerned that, having built up expectations of a hike for so long, not moving would send a disturbing message and erode the bank's credibility.
Delaying a rise "could increase uncertainty in financial markets and unduly magnify the perceived importance of the beginning of the policy normalisation process," the minutes said.
- Gradual rise -
Worries about a hike have also been tempered by previous comments from the bank that any increase would be gradual.
"The pace of the rise is what’s much more important than the rate rise itself," Angus Gluskie, a managing director at White Funds Management in Sydney, told Bloomberg News.
"If a rise occurs slowly then markets, investors and consumers all have time to respond to it and adjust accordingly. That’s the ideal circumstance and that’s certainly what the Fed is trying to achieve."
US dealers reacted positively to the release, with all three main Wall Street indexes surging.
And their Asian counterparts followed the lead, with Tokyo, Hong Kong, Shanghai and Seoul all posting gains of more than one percent while Sydney was up more than two percent.
The dollar also advanced in US trade, hitting a near three-year high of 123.59 yen from 123.18 yen earlier Wednesday in Tokyo. However, it retreated in Asia as traders took into account the prospect any hike would be gradual.
The brighter outlook also injected confidence into higher-yielding, or riskier, emerging currencies.
The South Korean won climbed almost one percent and Malaysia's ringgit jumped 1.2 percent.
The Australian dollar rose 0.7 percent and Indonesia's rupiah was 0.4 percent higher while the Malaysian ringgit gained 0.8 percent. The Taiwan dollar, Thai baht and Singapore dollar also advanced.
Key figures around 0710 GMT
Tokyo - Nikkei 225: UP 1.1 percent at 19,859.81 (close)
Hong Kong: UP 1.3 percent at 22,466.90
Shanghai - composite: UP 1.4 percent at 3,617.06 (close)
Sydney: UP 2.1 percent at 5,242.60 (close)
Dollar/yen: DOWN to 123.30 yen from 123.59 yen in late US trade
Euro/dollar: UP to $1.0690 from $1.0660
New York - Dow: UP 1.4 percent at 17,737.16 (close)
New York - S&P 500: UP 1.6 percent at 2,083.58 (close)