Asian shares climb after Fed hikes as expected; eyes on Europe, Japan

Asian shares advanced and the dollar fell on Thursday after a well-flagged U.S. rate rise delivered no major surprises, although policymakers in Europe and Japan could pose risks for markets with their own interest rate decisions.

S&P 500 futures rose 0.2 per cent while Nasdaq futures gained 0.5 per cent, helped by a 6.8 per cent jump in Meta Platforms (META.O) in after-hours trading. Facebook's parent company reported a strong rise in advertising revenue, topping Wall Street targets.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 1.2 per cent amid hopes that U.S. tightening cycle could be over now. Japan's Nikkei (.N225) was flat.

China's blue chips (.CSI300) added 0.6 per cent while Hong Kong's Hang Seng index (.HSI) gained 1.5 per cent.

On Wednesday, the U.S. Federal Reserve delivered a quarter-point rate hike and kept the door open for more, as widely expected.

During the much-watched press conference, Chair Jerome Powell remained non-committal about the prospects of a hike in the next meeting in September, though analysts said a continued slowing of inflation and weaker economic data may prompt policymakers to pause.

"Chair Powell post the FOMC outcome started off sticking to script, but slowly morphed to an acknowledgement that inflation has indeed fallen, the real rate had risen and was indeed in a restrictive state," said Padhraic Garvey, regional head of research, Americas, at ING.

"As the conference went on he was almost on the verge of a nod towards an eventual rate cutting track down the line," said Garvey.

"Next up is the ECB's Lagarde, who is more prone to deviate. The 25bp hike is not the point. The tone is."

The European Central Bank is widely expected to raise interest rates for the ninth time in a row on Thursday. The slow retreat in inflation is piling pressure on policymakers to keep rates higher and for longer.

Another major risk event this week is the Bank of Japan meeting on Friday amid speculation of more tweaks to its ultra loose monetary policy. The majority view is policymakers would hold steady, according to a Reuters poll.

After the Fed decision, markets continued to bet that the tightening is done, with futures implying a slim chance - about 20 per cent - that the central bank could surprise with a quarter-point increase in September.

They also moved to price in sizeable rate cuts of 125 basis points by the end of next year.

On Wall Street, stocks ended little changed after the Fed hike, with the tech-heavy Nasdaq closing lower, dragged down by mostly technology stocks.

The U.S. dollar continued to be pressured in Asia, falling 0.4 per cent against a basket of major currencies at 100.73, on top of a drop of 0.2 per cent overnight.

The yen climbed 0.5 per cent on Thursday to 139.51 per dollar, after gaining 0.5 per cent overnight.

The peaking of U.S. rates would take pressure off on emerging market currencies and give Asian policymakers more scope to ease monetary policy.

U.S. Treasury yields were mostly steady on Thursday. The yield on 10-year Treasury notes held at 3.8609 per cent, after falling 6 bps overnight.

The rate-sensitive two-year was little changed at 4.8287 per cent, having also eased 7 bps overnight.

Elsewhere, oil prices were higher. Brent crude futures were up 0.9 per cent at $83.69 per barrel and U.S. West Texas Intermediate crude futures rose 1 per cent to $79.59.

Gold prices edged up 0.4 per cent to $1,979.47 per ounce.