Shares tick higher as Fed hikes rates, dollar jumps with short-term yields

The focus now shifts to the Bank of England, which is widely expected to leave interest rates steady later in the day, but all eyes will be on any hint about if high energy prices could force it to hike in November. The Bank of Japan, by contrast, is all but certain to lift interest rates on Friday.

As widely expected, the Fed raised interest rates by a quarter point overnight, but the unanimous decision tilted to the hawkish side, with the board signalling one more rate hike this year. Goldman Sachs now expects the Fed to hike rates again in October.

Futures imply there is a 50% chance that the Fed could follow up with a second hike as soon as next month to rein in inflation. A total of three rate rises have been priced in for this tightening cycle.

Commodity markets took a hit. Brent crude futures slipped 0.7% to $105.05 a barrel after falling 2.7% overnight as Saudi Arabia was reportedly offering crude cargoes through Oman, easing some concerns about Middle East supply disruption.