NEW YORK, Sept 18 — Investors have taken the Federal Reserve standing pat on interest rates as a signal to sell, with stocks falling from the US to Japan as American policy makers’ concern over global economic weakness fuels demand for the haven of debt.

The most anticipated Fed meeting of the year saw policy makers refrain from boosting borrowing costs for the first time since 2006, sending the greenback to a three-week low and sparking the biggest jump in two-year Treasuries since quantitative easing was started six years ago. Australian debt joined the climb today, while Japanese stocks drove a retreat in Asian shares.

“Yellen kept referring to the strong dollar and turmoil offshore, those were the main issues,” Mark Lister, head of private wealth research at Craigs Investment Partners Ltd. in Wellington, which manages about US$7.2 billion (RM30.411 billion), said by phone.

“They probably have taken a little bit more notice of what’s happening overseas, in China and emerging markets, than some people might have expected. Every meeting is going to be considered live from now on, but it’s looking like a better than even chance that it’s next year’s story.”

While traders were skeptical the Fed would pull the trigger on higher rates, about half of the economists surveyed by Bloomberg predicted some kind of increase amid a strong recovery in the US job market.

The decision, which came at a time when concern over China’s slowing economy has been whipsawing markets, maintains the record stimulus that has underpinned the third-longest US bull market since World War II. China’s shock currency devaluation and stock gyrations ignited the current wave of financial-market volatility.

The MSCI Asia Pacific Index slipped 0.5 per cent by 9:48am in Tokyo, with Japan’s Topix index snapping a two-day advance to slide 1.8 per cent. Standard & Poor’s 500 Index futures fell 0.1 per cent. Ten-year Australian yields slid 11 basis points to 2.76 per cent, as Treasuries maintained yesterday’s gains.

The Bloomberg Dollar Spot Index was little changed near its lowest level since Aug. 24 as the greenback lost another 0.2 per cent to the yen. Copper and nickel extended gains, while US oil pared its advance in the week.

Yellen said most Fed officials still expect a rate increase this year and that the US economy is performing well. She reinforced that the path of rate rises would be gradual. Odds of a hike in October are now at 19 per cent, and bets on one in December have slumped to 46.6 per cent, from 59 per cent a week ago, according to fed funds futures.

The S&P 500 ended Thursday down 0.3 per cent after initially rising more than 1 per cent in the wake of the Fed decision. Stocks most sensitive to interest rates had the largest moves, with utilities and real-estate companies advancing more than 0.9 per cent while banks lost 1.3 per cent.

The decision to hold rates probably wasn’t a surprise given the weakness in US equity markets. The market has been whipsawed since China unexpectedly devalued its currency on Aug. 11, a move that sent the S&P 500 to its first 10 per cent decline since 2011. The Fed has never started tightening policy within a month of a correction.

“Now that this is behind us, people are going to start focusing more on the problems that caused the correction in August, which is weakness in China and other emerging markets and a rough time on the earnings front,” said Matt Maley, an equity strategist at Miller Tabak & Co LLC in New York. — Bloomberg