The rebound came after Federal Reserve Chairman Jerome Powell said the central bank was not “actively considering” raising rates by 0.75 percentage point.

Asian shares rose on Thursday after the U.S. Federal Reserve raised its key interest rate by 0.5 percent, but on a less hawkish tone than some investors had feared.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.93 percent, but trading was limited as markets in Japan and South Korea were closed for a public holiday.

Chinese stocks bucked the trend as rising COVID-19 cases and strict restrictions in the financial centers of Beijing and Shanghai weighed on investor sentiment.

“Markets are excited about a less hawkish Fed, but we must not forget that rates will only go up in Asia, where inflationary pressures are high,” Gary Ng, senior economist at Natixis in Hong Kong, told Al Jazeera. “Liquidity will remain tight and investors need to prepare for more volatility across different asset classes ahead.”

Asian shares rose after Federal Reserve Chairman Jerome Powell said the central bank was considering similar rate hikes in June and July, but was not “actively considering” a 0.75 percentage point hike.

The Dow Jones Industrial Average rose 2.81% overnight, while the S&P 500 gained 2.99% and the Nasdaq gained 3.19%.

While the Fed’s half-point rate hike was the largest in 22 years, Powell’s speech tempered expectations for a period of aggressive tightening that could tip the world’s largest economy into recession.

In Asia, Hong Kong’s benchmark Hang Seng rose 0.77% in early trade, while the tech index rose 1.43%.

Australia’s S&P/ASX 200 was also strong, up 0.61%.

China’s benchmark CSI 300 opened 0.16% lower as mainland markets resumed trading after a three-day holiday.

OANDA’s senior market analyst for Asia Pacific, Jeffrey Halley, said gains in Asia were more restrained than those in the U.S. amid concerns about economic headwinds in the region.

“The relief rally we saw in the U.S. overnight was definitely more modest in Asia. While markets were higher, we should note that both Japan and South Korea are out today — both markets driven primarily by short-term retail sentiment,” Harley said. told Al Jazeera. “I think Asia is trying to fully replicate the U.S. rebound because of concerns about China’s zero Covid-19 restrictions, their impact on Chinese growth, and the knock-on impact it will have on the rest of the region by default.”

The market is also bracing for a near-term rate hike in the region, Halley said.

“India’s unscheduled rate hike yesterday also challenged other Asian central banks,” he said, referring to the Reserve Bank of India’s 0.4 percentage point hike on Wednesday. “The growing threat of rate hikes also capped the bullish reaction today. Like the 4% rise in oil prices overnight.”

Oil prices extended gains after the European Union, the world’s largest trading bloc, outlined plans to phase out imports of Russian oil.

U.S. crude futures were up 0.4% at $108.21 a barrel, while Brent crude futures were up 0.36% at $110.54. Both benchmark crude prices rose more than $5 a barrel on Wednesday.