Australia

Australian shares are poised to rise after a relief rally on Wall Street as the US Federal Reserve delivered a meaty rate hike as forecast and signalled the pace of increase could slow.

ASX futures were up 52 points or 0.8% at 6775 as of 8.00am on Thursday, pointing to a pop at the open.

Overseas, the broad market S&P 500 rose 2.6%. The Dow Jones Industrial Average advanced 1.4%. The Nasdaq Composite had its biggest one-day percentage gain in more than two years, surging 4.1% bolstered by reassuring full-year guidance from tech giant Microsoft.

The US central bank lifted its federal-funds rate by 0.75 percentage point, to a range between 2.25% and 2.5%, and said in a statement it is "strongly committed to returning inflation to its 2% objective." Chairman Jerome Powell said the pace of further rises could slow but the bank would avoid offering specific guidance as it has done in the past.

“At some point it will be appropriate to slow down . . . We might do another unusually large increase [in September] but that’s not a decision that we’ve made at all, we’re going to be guided by the data,” he said.

Powell also told reporters he doesn't think the US is in a recession. "Two-point-seven million people hired in the first half of the year -- it doesn't make sense that the economy would be in recession."

In commodity markets, Iron ore rose 0.2% to US$112.40, Brent crude oil jumped 3% to US$107.48, while gold edged up 0.1% to US$1737.50.

Local bond markets rallied after a softed-than-expected inflation read on Wednesday, with the yield on Australian 2 Year government bonds falling to 2.57% while the 10 Year dropped to 3.24%. Overseas, the yield on 2 Year US Treasury dipped to 3.00% and the yield on the 10 Year US Treasury notes fell to 2.78%.

The Australian dollar rose to 69.91 US cents, up from 69.38 at the previous close. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies slipped to 98.35.

Asia

Chinese shares ended mixed, as losses by liquor makers were offset by gains among renewables and IT companies. Market movements in the near term may be driven by the upcoming US Fed decision and China's Politburo meeting, Capital Securities said in a note. Index heavyweight Kweichow Moutai lost 1.6% and Wuliangye Yibin shed 1.5%, while iFlytek rose 2.0% and surveillance-camera maker Hangzhou Hikvision added 1.1%. Among renewable-energy stocks, LONGi Green Energy climbed 2.7% and Tongwei Co. advanced 1.9%, though electric-car-battery maker CATL dropped 1.3%. The Shanghai Composite Index slipped 0.1% to 3275.76, while the Shenzhen Composite Index rose 0.3% and the ChiNext Price Index finished flat.

Hong Kong stocks ended 1.1% lower at 20670.04, dragged down by consumer shares as worries about high inflation and recession risks persist. Trading was mixed among other Asian equities as investors awaited the US Fed rate decision later in the global day. Coronavirus-related developments will also remain in focus amid concerns over rising case numbers in China. ANTA Sports dropped 3.4% , sportswear company Li Ning fell 3.1% and garment maker Shenzhou International lost 2.2%. China Power International was off 1.1% after it issued CNY1 billion in short-term commercial paper. Bocom International finished unchanged after saying it will set up a private equity fund to invest in new energy and biomedicine sectors.

The Nikkei Stock Average reversed early losses to end 0.2% higher at 27715.75, supported by gains in transportation stocks. Central Japan Railway rose 2.2%, West Japan Railway gained 1.5% and East Japan Railway advanced 2.0%. Tokyo Gas fell 1.6% after cutting its FY guidance. Digital camera maker Canon slipped 1.0% after its 2Q net profit missed analysts' estimate. Video game developer Capcom declined 0.6% after its 1Q net profit fell on year. Focus is expected to remain on corporate earnings and the US Fed rate decision due later in the global day.

Europe

European markets ended higher with the pan-European Stoxx Europe 600 and German DAX closing up 0.5%, while the French CAC 40 rose 0.8%.

London’s FTSE 100 ended Wednesday up 0.66%, as positive numbers from the likes of Lloyds Banking, Reckitt Benckiser and Smurfit Kappa helped push the index to its highest levels in six weeks.

European markets in general performed positively today, helped by broader resilience in the tech sector after last night's strong numbers from Microsoft Corp. and Google owner Alphabet Inc., says CMC Markets UK chief market analyst Michael Hewson.

Elsewhere, European natural gas prices hit four-month highs as gas flows through Nord Stream 1 were dialled back, falling to 20% of capacity, Mr. Hewson says in a research note.

North America

US stocks rallied Wednesday afternoon, extending earlier gains, after the Federal Reserve signalled it would move aggressively to tame inflation and the central bank's chairman argued that the nation's economy hadn't yet slipped into a recession.

The S&P 500 rose 2.6%. The Dow Jones Industrial Average advanced 1.4%. The Nasdaq Composite had its biggest one-day percentage gain in more than two years, surging 4.1%.

The US central bank lifted its federal-funds rate by 0.75 percentage point, to a range between 2.25% and 2.5%, and said in a statement it is "strongly committed to returning inflation to its 2% objective."

"The Fed is prepared to continue until they have price stability in lowering inflationary expectations," said Quincy Krosby, chief equity strategist at LPL Financial. "That's what the market wants. Inflation remains and the question now is how fast is it pulling back."

Fed Chairman Jerome Powell told reporters he doesn't think the US is in a recession. "Two-point-seven million people hired in the first half of the year -- it doesn't make sense that the economy would be in recession," Mr. Powell said.

Stocks rallied earlier on Wednesday after mega-cap technology companies Microsoft and Google parent Alphabet reported earnings that were better than investors feared.

"The market is bearishly positioned," said Tim Leary, a high-yield bond portfolio manager for RBC Global Asset Management. "Trading volumes have been thin. You get a whiff of good news, and it doesn't take much to have a market rally."

It is a pivotal and busy week in financial markets, and traders around the world were studying the interest-rate decision from the Fed.

Investors have been watching closely for any clues from central bankers on the size of further interest-rate increases this year -- and whether officials expect to then turn around and begin cutting rates next year.

In a policy statement, Fed officials acknowledged signs of slower economic activity. Mr. Powell said it will likely become appropriate to slow the pace of interest-rate hikes.

The US stock market has performed well on days when the Fed has raised rates this year, Bespoke Investment Group noted Tuesday. Wednesday's 0.75-percentage-point increase marked the Fed's second consecutive increase of that magnitude this year. The Fed hasn't lifted rates that quickly since the 1980s.

"We want to hear what [Fed Chairman Jerome] Powell is thinking about the inflation outlook and what he is thinking about the growth outlook," said Seema Shah, chief global strategist at Principal Global Investors. "But we have to be careful. We've learned in the last couple of months that we can't read too much into any broad guidance."

In the bond market, the yield on the benchmark 10-year US Treasury note edged down to 2.731%, from 2.786% Tuesday. Yields rise when bond prices fall. The yield on the two-year note, meanwhile, slipped to 2.968%, from 3.041% the day before.

Short-term yields have been elevated this year as investors prepared for the Fed to keep aggressively raising interest rates, keeping the US Treasury yield curve inverted. That signal is often seen as a key recession predictor.

Stocks are on track to close July with gains, though many investors don't expect gains to be long-lasting.

"It doesn't mean that a recession isn't going to happen within the next couple of quarters," Ms. Shah said. "This is your ultimate bear-market rally."

Investors have grown increasingly worried that the Fed could plunge the US into a recession through tighter policy. Second-quarter gross-domestic product data on Thursday will provide insight into the economy's recent performance.

Investors are also monitoring earnings results this week, the busiest of the earnings season, for clues about how companies are navigating decades-high inflation.

In earnings Wednesday, Shopify warned it expects higher inflation and rising rates to pressure consumers' wallets, and noted that the strength of the US dollar weighed on results. The company reported a loss in the second quarter. The Wall Street Journal reported this week that the company is cutting 10% of its global workforce. Shopify rose $3.69, or 12%, to $35.24, a day after falling 14%.

Sherwin-Williams fell $22.32, or 8.8%, to $231.97 after it reported a profit decline amid lower-than-expected sales, as the paint-and-coating manufacturer contended with high raw-material costs.

Spotify shares climbed $12.64, or 12%, to $116.61 after the music-streaming giant reported accelerated user growth and a rise in advertising revenue for the second quarter.