The US Federal Reserve's decision to leave interest rates unchanged and strike a cautious tone about the global economy has boosted emerging markets.
The chairman of the Federal Reserve, Jay Powell, said a catalogue of worries in the global economy, including slower economic growth in China and Europe, meant the US should take a more cautious approach to interest rates.
This boosted the Japanese and Hong Kong stock markets, both of which rose by about 1 per cent since the announcement, while the S&P 500 is up 1.5 per cent.
The FTSE has been relatively unaffected, rising less than 1 per cent this morning.
A slower pace of rate rises in the US is generally regarded as good for emerging markets because it means the dollar is likely to weaken, meaning emerging market companies and countries can borrow at a cheaper rate.
Lower interest rates in the US also boost equity markets because it means the income that can be earned from a US government bond, generally regarded as the lowest risk asset in the world, remains low.
If the income available on a US bond rises, then investors have less incentive to buy an equity rather than collecting the lower risk income from the bond.
It was the US 10 year bond yield rising to 3 per cent in 2018 that sparked the severe equity market sell-off.
Anna Stupnytska, global economist at Fidelity International, said: "The Fed's assessment of risks has changed significantly. Powell emphasised several cross-currents that suggest a less favourable outlook, including continuing slowdown in global growth, a range of political risks such as Brexit, trade uncertainty and the US government shutdown, as well as less supportive financial conditions.
"He also noted muted inflationary pressures, suggesting the risk of higher inflation has diminished."
She said the US central bank’s revised stance was "clearly supportive" for riskier assets.
Nick Maroustos, co-head of global bonds at Janus Henderson Investors, said: "We feel it will take significant positive data to get the Fed back in hiking mode.
"The economy is not firing on all cylinders and inflation is nonexistent, remaining well contained as it’s less linked to decreasing US unemployment.
"Geopolitical risk is at an all-time high as politically we face further gridlock in Washington. The stagnating economy and geopolitical risk keep a cloud over growth prospects."
Melanie Baker, economist at Royal London Asset Management, said she was "cautious" on the outlook for the global economy, but did not feel a recession is imminent.