Asian stocks higher after Fed says rate hikes may be needed

Currency traders watch monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, July 7, 2022. Asian stock markets gained Thursday after the Federal Reserve said higher U.S. interest rates might be needed to cool inflation. (AP Photo/Ahn Young-joon)

A currency trader walks by the screens showing the foreign exchange rates at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, July 7, 2022. Asian stock markets gained Thursday after the Federal Reserve said higher U.S. interest rates might be needed to cool inflation.(AP Photo/Ahn Young-joon)

A currency trader watches monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, July 7, 2022. Asian stock markets gained Thursday after the Federal Reserve said higher U.S. interest rates might be needed to cool inflation.(AP Photo/Ahn Young-joon)

Traders work on the floor at the New York Stock Exchange in New York, Friday, July 1, 2022. Stocks wavered between small gains and losses in morning trading on Wall Street Wednesday, July 6 as worries about inflation, rising interest rates and a potential recession weigh on the broader market. (AP Photo/Seth Wenig)

BEIJING (AP) — Asian stock markets gained Thursday after the Federal Reserve said higher U.S. interest rates might be needed to cool inflation.

Shanghai, Tokyo and Sydney advanced. Hong Kong declined. Oil prices edged higher after falling below $100 per barrel this week.

Wall Street's benchmark S&P 500 index gained 0.4% on Wednesday after notes from the latest Fed meeting said “an even more restrictive stance could be appropriate" to get inflation back to its 2% target. Fed officials acknowledged that could weaken the economy.

Investors worry aggressive U.S. and European rate hikes to contain prices rises that are running at a four-decade high might depress global economic activity.

“Stocks rose because runaway commodity and oil prices are sinking,” said Stephen Innes of SPI Asset Management. “Both are the critical targets Fed policy is engineered to tame; hence, inflation expectation is coming under control.”

The Shanghai Composite Index rose 0.5% to 3,372.42 and the Nikkei 225 in Tokyo gained 1.1% to 26,399.23. The Hang Seng in Hong Kong lost 0.4% to 21,498.91.

The Kospi in Seoul climbed 2.1% to 2,340.03 and Sydney's S&P-ASX 200 was up 0.4% to 6,618.90.

India's Sensex opened up 0.6% at 54,089.,79. New Zealand declined while Southeast Asian markets advanced.

On Wall Street, the S&P 500 rose to 3,845.08. The The Dow Jones Industrial Average gained 0.2% to 31,037.68. The Nasdaq composite added 0.3% to 11,361.85.

The Fed last month raised its key interest rate by three-quarters of a point to a range of 1.5% to 1.75%, the biggest single increase in nearly three decades. Chair Jerome Powell suggested at that time a rate hike of one-half or three-quarters of a point, three times the Fed's usual margin, was likely when policymakers meet late this month.

Notes released Wednesday from the Fed's June 14-15 meeting confirmed other officials agreed that such an increase would “likely be appropriate.”

Inflation has been boosted by Russia's attack on Ukraine, which pushed up prices of oil and other commodities, and Chinese anti-virus controls that shut down Shanghai and other industrial centers disrupted supply chains.

Oil prices closed below $100 per barrel on Tuesday for the first time since early May but U.S. crude is still up more than 30% this year.

Benchmark U.S. crude gained 46 cents to $98.99 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost 97 cents to $98.53 a barrel Wednesday. Brent crude, the price basis for international trading, rose 45 cents to $101.16 per barrel in London. It tumbled $2.08 the previous session to $100.69.

The dollar declined to 135.69 yen from Wednesday's 135.98 yen. The euro gained to $1.0201 from $1.0182.