Asian stocks rally as fears ease over Ukraine, Fed and China

Hong Kong led strong gains in Asian stock markets on Thursday, buoyed by signs of progress in peace talks between Russia and Ukraine and by expectations of more support for China's wobbly economy.

Pan-European stock futures also looked set for a firmer open, pointing 0.21 per cent higher. US stock futures indicated a slightly lower restart, but followed a 2.2 per cent surge for the S&P 500 overnight.

Investors took in stride the long expected start of monetary tightening in the United States.

Treasury yields eased a little after spiking to nearly three-year highs overnight - with shorter-end yields rising more to flatten the curve - after the Fed on Wednesday raised the policy rate for the first time since 2018.

The Fed increased rates by a quarter point, as expected, and telegraphed equivalent hikes at every meeting for the remainder of this year to aggressively curb inflation.

The dollar, though, remained on the back foot and oil stabilized well south of recent multi-year highs amid signs of material progress in talks between Russia and Ukraine to end a three-week-old invasion that Moscow says is a "special military operation" to demilitarize its neighbour.

Meanwhile, investors' concerns about a sharp slowdown in China, which is battling a spreading Covid-19 outbreak with ultra-restrictive measures, were assuaged after Vice Premier Liu He on Wednesday signalled more stimulus to support the economy and markets, with additional supportive comments coming from the country's central bank, the securities regulator and elsewhere.