By Gina Lee

Investing.com – Asia Pacific stocks were mostly up on Wednesday morning, with investors digesting the probability of a de-escalation in the war in Ukraine and oil pared declines.

Japan’s fell 1.27% by 10:29 PM ET (2:29 AM GMT), with contracting 0.8% year-on-year in .

South Korea’s was up 0.27% and in Australia, the rose 0.8%.

Hong Kong’s rose 0.85%.

China’s gained 0.63% while the jumped 1.41%.

Oil recovered some losses from early Asian trading but investors remain cautious that the war will end. Russia said it will sharply reduce military activity near the Ukrainian capital Kyiv, and chief negotiator Vladimir Medinsky said the country would take steps to “de-escalate” the conflict.

However, Tuesday’s talks between Ukraine and Russia failed to reach an agreement on a cease-fire, with the Pentagon warning that Kyiv remains under threat. The war in Ukraine, triggered on Feb. 24 by the Russian invasion of Ukraine, is not over. Analysts have begun to doubt Russian intentions.

The prospect that Russia and Ukraine could reach peace agreements had been bolstered by falling oil prices, and lower inflation expectations. This gave bonds some relief from recent losses. Short-end yields dropped, which resulted in a temporary inversion of the 2- to 10-year curve. Even though this is a common indicator of imminent recession, its accuracy after so many years of strong stimulus is uncertain.

The U.S. Treasury yield curve’s inversion sparked a debate over the risks of a growth downturn as central banks begin to tighten their monetary policies. These include the U.S. Federal Reserve which is expected to keep increasing interest rates through 2022.

“We knew that we were late-cycle and typically the yield curve inverts, and it takes anywhere from 18 to 24 months to actually move into a recession,” Pacific Investment Management Co. portfolio manager Erin Browne told Bloomberg.

“There are reasons to believe this time around that yield curve inversion may not be as good an indicator as it has been in the past, particularly given the enormous amount of quantitative easing undertaken by global central banks,” she added.

Philadelphia Fed Bank President Patrick Harker said he expects a series of “deliberate, methodical” rate increases in 2022, but said he is open to a half-point move in May if near-term data shows more inflation. Harker’s colleagues, Richmond Fed President Thomas Barkin, and New York Fed President John Williams will speak on Wednesday and Thursday respectively.

According to the most recent U.S. data the stood at 107.2 million in March 2022 and totaled 11.26 billion. Additional data including the and Friday’s latest jobs report will be available later in the day.

China’s and the purchasing manager indexes will be released in Asia Pacific on Thursday. The PMIs will then be published on Friday.