By Gina Lee

Investing.com – Asia Pacific stocks were down on Wednesday morning, as soaring inflation due to increasing energy costs continue to dampen investor sentiment about the economic recovery from COVID-19.

Japan’s fell 0.93% by 10:05 PM ET (2:05 AM GMT). South Korea’s fell 0.85%, with data released earlier in the day showing that the grew 2.5% year-on-year in September.

Australia’s was down 0.43 percent. Hong Kong’s slid 1.22%, with the city’s chief executive Carrie Lam handing down her annual policy address later in the day.

Chinese markets closed on holiday. However, worries about China’s property sector continued as regulatory tightening continues. On Tuesday, Man Group, Soros Fund Management and Elliott Management expressed concern about investor sentiment.

On Tuesday, data showed that for September the U.S. PMI was 54.9 and the 61.9. This data is in line with the U.S. Federal Reserve’s decision to taper assets due to higher than expected inflation and spiraling costs.

As investors anticipate a slow but strong recovery and as other central banks prepare to start asset tapering, volatility has increased on global markets.

The hiked its interest rate to 0.50% from the previous month’s 0.25% as it handed down its policy decision earlier in the day, with the will hand down its decision on Friday. A U.S. Jobs Report, including the most recent, will be available on Friday.

The ongoing debate in the U.S. Congress over the nation’s debt ceiling and President Joe Biden’s economic agenda is also contributing to market uncertainty.

“For the last five or six months we’ve entered a period of kind of a mini-cycle in the U.S. where you’ve got a changing Fed regime, and we are at the extended end of a recovery,” Union Bancaire Privee Head of Equity Research for Asia Kieran Calder told Bloomberg.

“It leaves the market vulnerable to external shocks and increased volatility.”