By Gina Lee

Investing.com – Asia Pacific stocks were mostly down on Friday morning, while U.S. equity futures steadied amid cautious trading. Investors continue to monitor both the U.S. Federal Reserve’s plan to tighten its monetary policy and the latest COVID-19 outbreak in China.

Japan’s edged down 0.19% by 10:38 PM ET (2:38 AM GMT). The February figure was JPY1.648 trillion (13.31 Billion), while it was JPY520billion.

South Korea’s inched down 0.09% while in Australia, the rose 0.62%.

Hong Kong’s was down 0.53%.

China’s was down 0.69% and the fell 0.95%.

U.S. shares saw modest gains on Thursday, and global equities are set for a weekly loss as concerns that the Fed’s policy could lead to a recession continue.

U.S. Treasury yields retreated, and the bond curve remained steeper, as the impact of the Fed’s hawkish tone in the continues. Minutes released by the Fed on Wednesday showed that the central bank had plans to trim its balance sheets by $1 trillion per year.

Oil was mostly on a downward trend, with the International Energy Agency and the U.S. planning to release millions of barrels of crude from strategic reserves and China’s COVID-19 outbreak dampening fuel demand.

The prospect of sharp Fed rate hikes alongside a reduction in its bond holdings, the ongoing war in Ukraine, and China’s COVID-19 outbreak, with the city of Shanghai topping 21,000 daily cases, are all dampening investor sentiment and risk appetite.

“Stocks have had a little bit of a harder time this week digesting the fact that interest rates are going to be higher” amid a major shift in expectations around monetary policy, Ameriprise Financial Inc. global market strategist Anthony Saglimbene told Bloomberg.

At separate events, Fed policymakers spoke on Thursday about the progress of Fed policies.

James Bullard, President of the St. Louis Fed said that he would prefer to raise the policy rate from 3% to 3.25 percent in the second-half 2022. Charles Evans, Chicago Fed President and Raphael Bostic, his Atlanta counterpart said they prefer to keep rates neutral but continue to monitor the economy.

Later in the day, the Reserve Bank of India also will announce its policy decision.

Meanwhile, the war in Ukraine that started with Russia’s invasion on Feb. 24 could last weeks, or even years, the U.S. warned. The European Union also reached an agreement to ban coal imports from Russia, the first time that the bans have targeted Russia’s crucial energy revenues.