Fed Rate Hike Sparks Mixed Market Reactions

The Federal Reserve's decision to raise interest rates for the first time in three years has sent mixed signals across global markets. On Thursday, Wall Street closed lower following the rate hike announcement, but world shares mostly advanced as investors absorbed the news.

The Fed's key rate now sits at a target range of 3.75%-4.00%, aiming to control U.S. inflation that remains above its target level. Despite this, U.S. futures were higher, with the S&P 500 climbing 0.8% and the Dow Jones Industrial Average gaining 0.7%. Early European trading also saw gains, with Britain's FTSE 100 rising 0.5% to 10,739.72.

In Asia, Japan's Nikkei 225 index gained 0.3%, while South Korea's Kospi edged down less than 0.1%. The Hong Kong Hang Seng fell 0.4% to 24,604.29, and the Shanghai Composite index lost 0.4% to 3,875.60.

Lorraine Tan, director of equity research for Asia at Morningstar, stated that the market reactions were 'pretty much expected' since the rate rise was in line with market expectation. However, she noted that ongoing global tensions and the war-driven energy shock may continue to put pressure on inflation.