Hong Kong's Hang Seng rises nearly 2%, mainland China stocks mixed on return from holidays

SINGAPORE — Shares in Asia-Pacific were mixed in Thursday morning trade following the U.S. Federal Reserve's widely expected decision overnight to hike rates by half a a percentage point — its biggest increase in two decades.

Hong Kong's Hang Seng index led gains regionally, rising close to 2% in early trade as shares of Tencent jumped more than 2%.

Mainland Chinese stocks were mixed as they returned to trade following days of holidays. In Thursday morning trade, the Shanghai composite gained 0.41% while the Shenzhen component shed 0.42%. Data released over the weekend showed Chinese factory activity contracted in April as Covid lockdowns hit industrial production.

The S&P/ASX 200 in Australia climbed 0.64%, while MSCI's broadest index of Asia-Pacific shares outside Japan traded 1.35% higher.

Markets in Japan and South Korea are closed on Thursday.

The U.S. Federal Reserve on Wednesday increased its benchmark interest rate by half a percentage point, in line with market expectations. The central bank also outlined a program whereby it will eventually cut its bond holdings by $95 billion a month.

Fed Chair Jerome Powell emphasized the commitment to bringing inflation down, though he said a 75 basis points hike is "not something the committee is actively considering."

Markets on Wall Street jumped overnight following the Fed decision, with the S&P 500 rising nearly 3% to 4,300.17. The Dow Jones Industrial Average surged 932.27 points, or 2.81%, to 34,061.06. The Nasdaq Composite soared 3.19% to 12,964.86.

"It was the push back on a 75bp hike from the US Fed Chair Powell that set the market rally in motion," Lavanya Venkateswaran, an economist at Mizuho Bank, wrote in a note.

"The market reaction, mainly underscoring a repricing from the aggressive rate hikes built in, does not take away from the hawkish Fed intentions," said Lavanya.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 102.534 following a recent decline from above 103.

The Japanese yen traded at 128.78 per dollar, stronger as compared to levels above 130 seen against the greenback yesterday. The Australian dollar changed hands at $0.7259 after a recent surge from below $0.721.

Oil prices were higher in the morning of Asia trading hours, with international benchmark Brent crude futures up 0.37% to $110.55 per barrel. U.S. crude futures climbed 0.35% to $108.19 per barrel.

— CNBC's Jeff Cox contributed to this report.