Global shares generally traded higher on Thursday amid anticipations of more rate hikes by central banks.
MSCI's broadest index of world shares — which tracks shares in various developed and emerging countries — rose by 0.48 percent after nearly hitting a seven-week in the previous day.
The pan-European benchmark index, the STOXX 600, closed 0.5 percent higher despite trading in the red early in the session. Shares of the food and beverage sector led the gain with a 1.8 percent increase. Meanwhile, the banking sector slid by 0.8 percent.
The U.S. stock market rallied after ending mixed on Wednesday. The blue-chip Dow closed at 33,003.57, gaining 341.73 points or 1.05 percent. The S&P 500 concluded the session at 3,981.35, rising by 29.96 points or 0.76 percent. Meanwhile, Nasdaq ended at 11,462.98, adding 83.50 points or 0.73 percent.
In Asia, Japan's Nikkei 225 last traded at 27,927.47, gaining 1.56 percent. Meanwhile, South Korea's Kospi rose by 0.17 percent to 2,432.07. The Hang Seng index in Hong Kong gained 0.68 percent to 20,567.54. The CSI 300 index in China also rallied, gaining 0.31 percent to 4,130.55.
Australia's S&P/ASX 200 gained 0.39 percent to 7,283.60. On the other hand, New Zealand's S&P/NZX 50 declined by 0.27 percent to 11,868.79.
Data showed that manufacturing activity in the U.S. had contracted for the fourth consecutive month in February, but prices for raw materials soared during the same period. A weekly report from the U.S. Department of Labor also showed that unemployment benefits fell last week.
Meanwhile, consumer price inflation in the eurozone went down to 8.5 percent in February, above an earlier forecast of 8.2 percent.
Federal Reserve to hike interest rates by 25 basis points
The market expects the U.S. Federal Reserve to further tighten its monetary policy in the coming months. Fed futures forecast the interest rate to peak at more than 5.5 percent by September, meaning that the Fed would need to raise interest rates three more times from the current range of 4.5 to 4.75 percent.
The U.S. central bank will hold another rate-setting meeting on March 21 to 22, with the market mostly expecting a 25-basis-point hike and a smaller percentage of investors predicting a 50-basis-point increase.
Analysts said the rally in the U.S. equity market was partially caused by Atlanta Fed President Raphael Bostic's remark that he favored a 25-basis-point hike for the next rate-setting meeting.
Bostic's remark was less hawkish than some other officials who wanted a bigger hike size. For instance, Minneapolis Fed President Neel Kashkari said he was "open-minded" about a 50-basis-point hike.
"I am still very much of a mindset that slow and steady is going to be the appropriate course of action," Bostic said.
Like the Fed, the European Central Bank (ECB) has also been raising its benchmark rates to bring down the inflation rate to the target rate of two percent. The market predicts the ECB's benchmark rate to peak at around four percent, which will be the central bank's all-time high rate.
Strategists at the Walls Fargo Investment Institute warned investors that stock markets would be volatile in the coming days. Wells Fargo also revised its recession forecast, saying that a recession would likely occur in the second half of this year instead of earlier.
U.S. bond yields decline slightly
After soaring on Wednesday, the U.S. bond market cooled down slightly on Thursday. The two-year Treasury yields went down to 4.856 percent after hitting its 16-year high of 4.916 percent the day before.
Meanwhile, the 10-year Treasury yields went down to 4.001 percent after achieving a new four-month high of 4.085 percent.