Global shares rise as investors digest a hawkish Fed, but the Russia-Ukraine crisis tempers gains

• Global shares rose as investors weighed the first US interest-rate rise since 2018, while war in Ukraine remained firmly in focus.
• The central bank indicated it was willing to act more quickly to cool inflation, which is running at 40-year highs.

Global shares rose Thursday as investors digested the first US interest-rate rise in four years, while concerns around the war in Ukraine kept sentiment fragile.

The Federal Reserve's plan for tightening tipped the dollar back from two-year highs, and boosted commodities like gold and oil.

Futures on the S&P 500, the Dow Jones and the Nasdaq 100 all eased between 0.2% and 0.3%, suggesting a modestly softer start to trade later on. In Europe, the Stoxx 600 gained 0.2% in early European trade.

On Wednesday, the Fed raised interest rates to a range of 0.25%-0.50% and indicated that it intends to quash inflation, which is running at 40-year highs, more quickly than it previously expected. It signaled at least six further rate rises this year, in line with market expectations, and several more in 2023.

Stocks and bonds had been under fairly hefty pressure before the central bank's announcement, as investors ratcheted up their expectations for Fed action this year. So there was a degree of relief once the Fed meeting was out of the way, leaving Russia's war in Ukraine as the main catalyst.

"Frankly, stocks are more interested in geopolitical developments at the moment than they are in anything the Fed says, with a convincing rally unlikely until the war in Ukraine reaches a (hopefully) peaceful conclusion," Caxton FX strategist Michael Brown said.

The MSCI All-World index was up 0.8%, heading for a gain of 3% this week, aided by a strong rebound in Asian markets. Hong Kong's Hang Seng gained 7% as beaten-down tech giants like Alibaba and Tencent roared higher, and Tokyo's Nikkei rallied over 6%.

Bond yields, which initially jumped to near three-year highs on Wednesday, eased back by Thursday, in line with a weaker dollar. The two-year Treasury yield, which is the most sensitive to interest-rate expectations, was last down 1 basis point at 1.932%.

The Bank of England meets later Thursday and is widely expected to deliver a third rate hike this year, as it, too, struggles to contain punishingly high inflation.

"In some respects, despite its muddled guidance over the last few months, the Bank of England has been ahead of the game when it comes to rate rises. Two rate rises since December has put base rates back to 0.5%, still below the levels they were pre-pandemic," CMC Markets chief strategist Michael Hewson said.

The war in Ukraine is entering its fourth week, and while diplomats are making some progress in peace talks, Russian shelling of city centers and civilians mean casualties continue to pile up. Moscow itself is becoming increasingly isolated on the world stage.

President Vladimir Putin said Thursday the Russian economy had withstood the worst hit from international sanctions so far, but acknowledged unemployment and inflation would rise.

Russia appears to have missed a coupon payment on foreign-currency sovereign bonds that was due Wednesday, meaning it now has 29 days to make payment or be declared in default. This would be its first foreign-currency default since the end of the Bolshevik revolution in 1918.

Commodities rallied broadly, lifted in part by a weaker dollar. The threat of disruption to many major raw materials from further sanctions on Russia has driven the price of commodities like copper, coal, oil, nickel and aluminum to record or multiyear highs.

Brent crude oil gained 4% to trade above $100 a barrel, but was still heading for a 5% loss this week. Gold rose 1.5% to change hands at around $1,937.60 a barrel.