SE Asia stocks higher on Fed caution over pace of rate hikes

Southeast Asian stock markets, except Vietnam, closed higher on Thursday tracking gains in the broader Asia region after the US Federal Reserve signalled a cautious approach to future rate increases.

In minutes released on Wednesday of a Fed meeting held earlier this month, policymakers of the US central bank agreed they should hold off on raising interest rates until they see evidence that a recent economic slowdown was temporary.

"The less probability of a June rate hike points to soft growth in the United States and encourages a risk-on appetite for investors towards high-growth emerging markets such as in Southeast Asia," said Grace Aller, an analyst with AP Securities.

"The US GDP is a little weak, so the flows could go to emerging markets where growth is relatively robust."

US economic growth slowed sharply in the first quarter, with Fed policymakers seeking to understand why a measure of underlying price gains also fell further below their 2% inflation target.

Singapore shares rose for a third straight session before ending flat, while the Philippine index finished 0.4% higher, boosted by telecoms and real estate stocks.

"In the short- to mid-term, there won't be any solid catalysts for the market, neither positive nor negative, unless the situation in Mindanao escalates...," Aller said.

On Tuesday, Philippine President Rodrigo Duterte imposed martial law on the Mindanao island, after a fierce bout of fighting erupted during a raid by security forces at a hideout of Islamic State-linked militants.

Malaysian shares gained 0.2%, led by financial and consumer discretionary stocks. CIMB Group soared to a more than two-year closing high, while Genting Malaysia Bhd rose 4.2% to hit a record high.

Indonesia was closed for a holiday and Vietnam was down 0.1%, hurt by financials.

In Asia, shares scaled two-year highs, with MSCI's broadest index of Asia-Pacific shares outside Japan advancing 0.9% as of 4.54pm.