US Federal Reserve
The US Federal Reserve has raised its benchmark interest rate by 25 basis points Reuters

Asian stock market indices were trading higher on Thursday (16 March) with the Shanghai Composite up 0.66% at 3,263.24 as of 5.35am GMT following the US Federal Reserve raising interest rates but keeping a dovish stance.

Overnight, the US central bank raised its benchmark interest rate by 25 basis points to a range of 0.75% to 1%. The move which was widely expected signalled the bank's growing confidence in the world's biggest economy.

While higher interest rates will lead to higher cost of borrowing, investors were said to be happy with the Fed's dovish stance. The Fed signalling no pick-up in the pace of tightening is said to have relieved many investors across Asia, who had earlier feared faster interest rate increases going forward.

"Even though the dot plot is not relevant because so much can change, the Fed reminded us all of the gradual nature of their expected behaviour on this rate hike cycle," Peter Boockvar, chief market analyst at The Lindsey Group, was quoted as saying by CNBC.

Steven Englander a strategist at CitiFX, was cited by Reuters as saying: "The Fed makes the world safe for risk until June. Buy emerging market FX, equities, commodities."

Meanwhile, the Bank of Japan, which held its monetary policy steady on Thursday, further signalled that it would not expand its monetary stimulus in the near future amid a positive view of its economy.

China reacted to the US Fed's move by increasing its short-term interest rates by 10 basis points, marking the People's Bank of China's third increase in three months.

Indices in the region were trading as follows at 5.58am GMT:

Hong KongHang Seng Index24,147.71Up1.49%
JapanNikkei 22519,581.00Up0.02%
South KoreaKOSPI2,144.63Up0.55%
AustraliaS&P/ASX 2005,785.80Up0.20%

On 15 March, the FTSE 100 closed 0.15% higher at 7,368.64 while the S&P 500 index closed 0.84% higher at 2,385.26.

Among commodities, oil prices rallied amid the US Fed's dovish stance. As of 1.49am EST, WTI crude oil was up 0.57% at $49.14 (£40.06) a barrel, while Brent crude was trading 0.66% higher at $52.15 a barrel.