Asian stocks rise after Fed sees inflation improving

People wearing protective masks stand near an electronic stock board showing Japan's Nikkei 225 index at a securities firm Thursday, Feb. 2, 2023, in Tokyo. Asian stock markets gained Thursday after the Federal Reserve said the U.S. economy is moving toward lower inflation but more interest rate hikes are planned. (AP Photo/Eugene Hoshiko)

A person stands in front of an electronic stock board showing Japan's Tokyo Stock Price at a securities firm Thursday, Feb. 2, 2023, in Tokyo. Asian stock markets gained Thursday after the Federal Reserve said the U.S. economy is moving toward lower inflation but more interest rate hikes are planned. (AP Photo/Eugene Hoshiko)

A person wearing a protective mask moves past an electronic stock board showing Japan's Nikkei 225 index at a securities firm Thursday, Feb. 2, 2023, in Tokyo. Asian stock markets gained Thursday after the Federal Reserve said the U.S. economy is moving toward lower inflation but more interest rate hikes are planned. (AP Photo/Eugene Hoshiko)

A person watches an electronic stock board showing Japan's Nikkei 225 index at a securities firm Thursday, Feb. 2, 2023, in Tokyo. Asian stock markets gained Thursday after the Federal Reserve said the U.S. economy is moving toward lower inflation but more interest rate hikes are planned. (AP Photo/Eugene Hoshiko)

Traders on the floor at the New York Stock Exchange watch Federal Reserve Chair Jerome Powell's news conference after the Federal Reserve interest rate announcement in New York, Wednesday, Feb. 1, 2023. (AP Photo/Seth Wenig)

The Federal Reserve interest rate announcement is displayed on the floor of the New York Stock Exchange in New York, Wednesday, Feb. 1, 2023. (AP Photo/Seth Wenig)

BEIJING (AP) — Asian stock markets gained Thursday after the Federal Reserve said the U.S. economy is moving toward lower inflation but more interest rate hikes are planned.

Shanghai, Tokyo, Hong Kong and Sydney advanced. Oil prices rose.

Wall Street's benchmark S&P 500 index closed 1% higher on Wednesday after the Fed raised its key lending rate by 0.25 percentage points, a smaller margin than previous increases. Chair Jerome Powell said the “disinflationary process has started” but “ongoing increases” in rates will be needed.

Traders hope lower inflation following repeated rate hikes by global central banks will encourage them to scale down plans for more increases. Some expect a U.S. cut before 2024, though Powell said he anticipates no reductions this year.

Markets put a “dovish interpretation” on Powell's comments despite his warning that it was too early to declare victory, said Venkateswaran Lavanya of Mizuho Bank in a report.

The gap between market pricing and Fed plans "appears to have widened,” Lavanya wrote. “This leaves room for a rude shock down the road.”

The Shanghai Composite Index gained less than 0.1% to 3,287.29 and the Nikkei 225 in Tokyo added 0.2% to 27,391.85. The Hang Seng in Hong Kong advanced 0.3% to 22,128.78.

The Kospi in Seoul was 0.6% higher at 2,463.20 and Sydney’s S&P-ASX 200 rose 0.2% to 7,513.80.

New Zealand and Jakarta advanced while Singapore and Kuala Lumpur declined.

Following Powell's news conference, the S&P recovered from an early loss to rise to 4,119.21, its highest close since August.

That appeared to encourage investors who worry the Fed and European central banks might be willing to push the global economy into recession to cool inflation that is near multi-decade highs.

“We can now say, I think for the first time, that the disinflationary process has started," Powell said. He said his “base case” is that the Fed's inflation target of 2% can be achieved “without a really significant downturn or really big increase in unemployment.”

The Dow Jones Industrial Average gained less than 0.1% to 34,092.96. The Nasdaq composite jumped 2% to 11,816.32.

Wednesday's announcement raised the Fed's overnight lending rate to a 16-year high of 4.5% to 4.75%, up from close to zero early last year.

Data on Wednesday gave a mixed picture of the U.S. job market, a factor in inflation expectations.

Hiring has stayed resilient despite repeated rate hikes. While that helps workers, it adds to worries that wage gains could add to upward pressure on prices.

Private payrolls rose by 106,000 in January, according to ADP, a payroll processor. That was a smaller gain than the previous month and below forecasts.

A separate U.S. government report indicated more strength. It said the number of job openings increased to 11 million in December, better than expected.

In energy markets, benchmark U.S. crude rose 66 cents to $77.07 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.46 on Wednesday to $76.41. Brent crude, the price basis for international oil trading, added 61 cents to $83.45 per barrel in London. It lost $2.62 the previous session to $82.84 a barrel.

The dollar fell to 128.55 yen from Wednesday's 128.77 yen. The euro rose to $1.1018 from $1.0979.