LONDON – Global shares eked out slim gains on Thursday as strong earnings in the semiconductor sector were overshadowed by news that the Federal Reserve would continue on its path of raising rates to quell inflation, but by taking smaller steps.

Better-than-expected revenue at chip giant Nvidia after hours sent its shares up 9 percent on Wall Street, helping to push Nasdaq futures 0.9 percent higher on Thursday, along with shares in Taiwan Semiconductor Manufacturing Co, and European peers such as ASM International and BE Semiconductor.

The MSCI all country share index was slightly firmer, adding to the year's 4.5 percent advance, after falling nearly 20 percent in 2022.

"I think the market is pricing in a slightly more aggressive Fed tightening than perhaps was going to be the consensus, but I don't think it's going to change that much," said Mike Hewson, chief markets strategist at CMC Markets.

In Europe, the STOXX index of leading European companies was 0.2 percent firmer, building on its 8.8 percent gain for the year to nearly wiping out much of last year's 13 percent loss.

Nearly all Fed policymakers backed further slowing the pace of rate hikes, minutes of the US central bank's last policy meeting showed on Wednesday, but it also indicated that curbing unacceptably high inflation would be the "key factor" in how much further rates need to rise.

Analysts say the early-year rally in stocks has succumbed to a realization that the Fed will continue to increase interest rates to cool the economy and tame inflation.

This has pushed safe-haven bond yields higher, making risky stocks less attractive, with the Fed's next meeting nearly a month away on March 22.

The yield on 10-year Treasury was slightly firmer at 3.9254 percent.

Eren Osman, managing director of wealth management at Arbuthnot Latham & Co, said bond yields were starting to price in a higher terminal rate of 5.5 percent rather than 5.25 percent for the Fed.

"From the minutes of the Fed, I take out of it a bonus that they appear to be more balanced in their inflation outlook, they recognize risks to the economy are skewed to the downside," Osman said.

"The idea that we see rate cuts later in the year are quite rightly being discounted to a greater extent," Osman said. "In the absence of a clear reversal in the current easing of inflation, we feel comfortable that yields have kind of topped out within this cycle."

Analysts said markets were bracing for a "no landing" scenario where global economic growth is resilient and inflation stays higher for longer, leading investors to dial back appetite for risk assets and government debt.

More data due

MSCI's broadest index of Asia-Pacific shares outside Japan touched its lowest level since Jan 6 in early trade, but rose about 0.3 percent as the day wore on.

The Bank of Korea also offered some relief by ending a year-long run of uninterrupted rate hikes with a pause, as expected.

The Australian and New Zealand dollar were both slightly firmer against the dollar.

The euro was little changed at $1.060. The dollar pegged against a basket of currencies reversed losses to edge higher.

Crude oil futures lost more than $2 a barrel on Wednesday on expectations of more aggressive interest rate hikes. On Thursday Brent crude futures rose 0.5 percent to $81.01 a barrel, while West Texas Intermediate crude advanced 0.45 percent to $74.27 a barrel.

Wall Street indexes fell overnight and are eyeing their worst week of the year so far as stronger-than-forecast US labor, inflation, retail sales and manufacturing figures have traders pricing interest rates staying higher for longer.

Gold steadied at $1,826 an ounce.

Final European inflation and US growth figures are due later in the day, though no major tweaks to preliminary numbers are expected. Fed officials Mary Daly and Raphael Bostic are also due to make appearances later on Thursday.