US stocks jump more than 2% after Fed announcement

Wall Street stocks rallied Wednesday after the Federal Reserve raised interest rates by 50 basis points, but signaled an even larger hike was not under consideration.

Near 1930 GMT, the Dow Jones Industrial Average was up 2.4 percent at 33,917.72 after Fed Chair Jerome Powell said the US central bank was not actively weighing a 75basis point increase. The broad-based S&P 500 gained 2.5 percent to 4,277.78, while the tech-rich Nasdaq Composite Index jumped 2.6 percent to 12,886.82.

Wednesday interest rate hike-the biggest since 2000 -was coupled with a move to begin reducing the central bank's bond holdings from June 1, marking the Fed's most aggressive steps so far to counter inflation.

But Powell said 50-basis point increases "should be on the table at the next couple of meetings," rejecting a possible three-quarter point rise. Talk of the larger rate hike has rattled investors in recent weeks.

Powell's remark "has catalyzed a huge sigh of relief in the market considering the Fed funds futures market was assigning a 95 percent probability for 75-bps hike next month," said Briefing.com. European stock markets and oil prices rose Wednesday after recent sharp losses but the euro struck a five-year low against the dollar as traders weighed widespread economic unrest.

Elsewhere, Europe's Dutch TTF gas price briefly rebounded after Russia's energy giant Gazprom stopped gas supplies to Bulgaria and Poland.

The two EU member nations had failed to pay in rubles despite President Vladimir Putin announcing that Russia would no longer accept payments in other currencies-a retaliation for the West's economic sanctions against Moscow over its invasion of Ukraine.

Traders on Wednesday were unpicking "the familiar concerns about tech earnings, inflation, interest rates, China's lockdown... and the war in Ukraine", noted Markets.com analyst Neil Wilson.

Asian stock markets earlier closed lower but suffered losses less sharp than seen Tuesday on Wall Street.

The downbeat mood over the economy has been compounded by weak earnings from some of the world's biggest companies. Tech firms, who rely on debt to drive growth, led Wall Street's plunge on fears that the Federal Reserve is at the beginning of a period of sharp interest-rate increases aimed at taming scorching inflation.

With the euro briefly dropping under $1.06 to record the lowest level since April 2017, analyst Wilson added that the "market clearly believes the Fed is going to town on rate hikes and the ECB is going to sit on its hands and do nothing".

While most Asian stock markets ended lower Wednesday, Shanghai bounced following a report that Chinese President Xi Jinping had committed to boosting infrastructure construction as a means of accelerating the economy. The comments were the latest from China's top brass, which has made a series of promises in recent weeks to kickstart growth.

However analysts said this had been offset by the leaders' refusal to back away from their strict Covid lockdown strategy. Oil prices-which have recently been under pressure owing to worries about weaker Chinese demand-jumped Wednesday in line with gas prices.

Tokyo stocks closed lower on Monday after Wall Street shares plunged on anxiety over higher interest rates.

The benchmark Nikkei 225 index ended down 1.90 percent, or 514.48 points, at 26,590.78, while the broader Topix index slipped 1.50 percent, or 28.63 points, to 1,876.52.

"Japanese shares started with losses following falls in the three US major indices ... with some buying back in chip-linked shares emerging in later trade," Okasan Online Securities said. The dollar fetched 128.57 yen in Asian trade, against 128.51 yen in New York on Friday.

Global stock markets dropped sharply ahead of the weekend as the latest hawkish comments from the Federal Reserve sent investors fleeing equities. Frankfurt ended down 2.5 percent on Friday and Paris fell two percent, while London lost 1.4 percent. Wall Street followed the trend with the Dow finishing down 2.8 percent. In Tokyo, ANA Holdings dropped 3.43 percent to 2,409.5 yen after the airline cut its full-year net sales guidance.