By Gina Lee

Investing.com – Asia Pacific stocks were down on Thursday morning, as the recent global equities rally eased. Volatile commodities prices raised concerns in a market that is already struggling with high inflation and the effects of the ongoing conflict in Ukraine. U.S. Treasuries’ recovery from a recent selloff was also under scrutiny.

Japan’s fell 1.09% by 10:08 PM ET (2:08 AM GMT), with the releasing the earlier in the day.

South Korea’s fell 0.75% while in Australia, the inched up 0.08%.

Hong Kong’s fell 0.77%.

China’s was down 0.62% and the fell 0.9%.

Even though the U.S. Treasuries recovered some of their losses, a recent rally was still on unstable ground. The market was flooded with buyers, who snapped up 20-year bonds for 2.3%.

The conflict in Ukraine that was sparked by Russia’s invasion of February 24th, shows no signs of ending. Investors struggled to find havens because they were concerned about its impact on the global economic system.

Russian President Vladimir Putin demanded that many countries pay in Russian rubles to purchase gas, which has caused European gas prices sharply to rise. Further sanctions could be imposed by the U.S. on Russia as soon as Thursday.

The extreme volatility in commodity markets caused by the war in Ukraine, as well as the global response, is sapping liquidity, according to some of the world’s biggest trading houses.

The recent shift from bonds to equities may be losing momentum. Additionally, volatility was exacerbated by a less hawkish U.S. Federal Reserve that aims to reduce inflation.

“Markets are really latching onto these short-lived themes and that’s causing significant price movement,” Wells Fargo Bloomberg: Tracie McMillion, Global Asset Allocation Strategy Head at the Investment Institute told Bloomberg.

“We think that for the near term we are probably going to be able to avoid a recession, but we are growing a little bit more concerned about 2023.” Some equity investors could see the Fed’s tougher stance on inflation as a positive, at least for now, she added.

Mary Daly of San Francisco Fed stated both a 50 basis point interest-rate increase and a decision about asset tapering at the Fed policy meeting that could take place in May 2022. Loretta Mester of Cleveland Fed stated Wednesday that she was in favor of front-loading rates increasing by 2022.

“The Fed needs to build up its ammunition. Overall global growth is going to be dampened and they need to be able to cut rates later on should this have a greater-than-expected recessionary effect,” Matthews Asia portfolio manager Teresa Kong told Bloomberg.

U.S. President Joe Biden intends to restore exemptions from tariffs on approximately two-thirds Chinese products previously granted waivers in the Trump administration. Biden will be attending a NATO emergency summit at Brussels later in today.