Australian shares climbed to a one-month high on Thursday, aided by gains in financial and mining stocks, after the US Federal Reserve increased interest rates as expected.

The S&P/ASX 200 index rose about 1% to 7,250.8, gaining for the second consecutive day.

The Fed announced on Wednesday a quarter-percentage point increase in its benchmark policy rate for the first time since 2018 and forecast seven rate hikes for the year, in a bid to contain rising price pressures.

“I think the Fed has now started to take inflation seriously, even if it may seem like it’s behind the curve,” said Henry Jennings, a senior investment adviser at Marcustoday Financial Newsletter.

“Effectively, the globe is still in stimulus mode despite inflation at elevated levels. It remains to be seen how the rate hikes pan out.”

New talk of compromise from both Moscow and Kyiv on a status for Ukraine outside of NATO lifted hope for a potential breakthrough after three weeks of war, which augured well for investor sentiment.

In Australia, financials, which account for nearly a third of the benchmark, firmed 1% to hit their highest since early January, with the ‘Big Four’ banks rising in the range of 1.3% to 1.6%.

Miners rose 1.3% in their best session since March 7, as iron ore prices jumped in China on hopes of additional stimulus to combat the economic fallout caused by an uptick in COVID-19 cases.

Index heavyweights Rio Tinto Ltd and BHP Group Ltd firmed 1.4% and 1%, respectively.

Technology stocks were also among the gainers, climbing 3.6%, after their US peers closed higher overnight.

In other news, Australia’s February unemployment rate hit its lowest since 2008, adding pressure on the Reserve Bank of Australia to follow the Fed’s way.

New Zealand’s benchmark S&P/NZX 50 index rose 1% to 11,999.0.