Emerging-market stocks were on the cusp of a bull market and currencies extended gains as the Federal Reserve’s less aggressive rate path prompted a reassessment of developing-nation prospects.

The MSCI Emerging Markets Index rose for a third day to take its advance since late January to just shy of 20 percent after the U.S. central bank signaled two, instead of four, rate increases this year. Energy shares were headed for their best month in almost a year as Brent crude held above $40 a barrel for a third day. The People’s Bank of China raised the yuan’s fixing by the most since November, while South Korea’s won was the biggest currency gainer.

A dovish Fed that appears more concerned about the outlook for the global economy is a shot in the arm for developing-nation assets that had dropped to multi-year lows on falling commodity prices and a pessimistic international growth outlook. Macquarie Bank Ltd., one of the world’s top 10 currency forecasters, turned from dollar bull to short-term bear following the Fed meeting that ended Wednesday.

“It’s a huge relief rally for emerging markets,” said Andy Ji, a foreign-exchange strategist at Commonwealth Bank of Australia in Singapore. “The rally still has legs, at least for the next three months, because valuations are attractive.”

Stocks

The MSCI Emerging Markets Index rose 0.7 percent to 822.65 as of 12:09 p.m. in Hong Kong, taking its gain to 19.8 percent from its Jan. 21 low. All 10 industry measures advanced, led by technology and industrial stocks. Energy shares are up 15 percent so far in March.

Tencent Holdings Ltd. provided the biggest boost to the index, climbing 3.4 percent in Hong Kong and heading for its highest close since June after Asia’s biggest Internet company posted a better-than-expected 45 percent jump in quarterly sales. In Manila, SM Investments Corp., a property developer, gained 3.6 percent. That drove the Philippine benchmark measure up 1.3 percent to near a bull market.

The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong rose 1.4 percent, following a 2.4 percent rally on Thursday, and is on course for the highest close since Jan. 6.

“There’s a slight increase in market optimism,” said Gerald Ambrose, who oversees the equivalent of $3.6 billion as managing director of Aberdeen Asset Management Sdn. in Kuala Lumpur. “I don’t think investors are hugely bullish as global growth is still a concern.”

Currencies, Bonds

A gauge of 20 emerging-market currencies increased to a four-month high and has advanced 7.9 percent from its 2016 lowpoint on Jan. 20. The onshore yuan climbed 0.18 percent as the PBOC strengthened its fixing by 0.51 percent.

South Korea’s won rallied 1 percent, heading for its biggest two-day gain since June 2010, and Taiwan’s dollar climbed 0.8 percent after closing up by the same magnitude on Thursday. Thailand’s baht was the only Asian currency to weaken, falling 0.3 percent.

Taiwanese sovereign bonds rose, pushing to the 10-year yield down three basis points to a record low 0.78 percent. Indonesian two-year notes advanced after the country’s central bank cut its benchmark rate for the third month in a row on Thursday. The yield fell four basis points to 7.49 percent, taking its decline this year to 112 basis points.

“There’s still a possibility for Bank Indonesia to cut rates further this year,” said Toru Nishihama, an emerging- market economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Fund inflows to bonds are likely to continue.”