By Gina Lee

Investing.com – Asia Pacific stocks were down on Monday morning. While the Euro gained in France’s presidential election results, investors are still trying to determine the effect of aggressive interest rate increases on the economy.

Japan’s fell 1.75% by 11 PM ET (3 AM GMT) and South Korea’s fell 1.55%.

Hong Kong’s fell 2.59%.

China’s fell 2.6% while the slid 3.09%.

For a holiday, the Australian and New Zealand markets will be closed.

Incumbent Macron defeated far-right rival Marine Le Pen in Sunday’s election, removing a key risk for markets. On Thursday, the European Central Bank will release its economic bulletin and will announce its policy decision over the course of the week.

U.S. yields fell, while Treasuries stopped the week-long rout. Bond markets increased their wagers on inflation longer term, putting risk assets under increasing pressure.

Jerome Powell, the Chairman of Federal Reserve, also supported a 50-basis point increase in May 2022. This was also done during week précédent. Additionally, the ECB sends more tightening signals which further reduces risk appetite.

“There has been little to avert the investor pessimism as inflation and interest rate expectations start to bite,” Federated Hermes (NYSE:) Ltd. head of global equities Geir Lode said in a note.

“In particular due to the uncertainty of the macro environment, expectations are low with regard to forward estimates and guidance, building on lowered expectations from the previous quarter,” the note added.

Chinese assets are also under threat, as the yuan dropped to its lowest level in one year Friday. Investors will also be closely monitoring any changes in government policy, given the ongoing COVID-19 outbreaks.

However, “the fundamentals of the Chinese economy remain quite solid,” AllianceBernstein (NYSE:) co-head of Asia Pacific fixed income Jenny Zeng told Bloomberg.

“The worry is the current policy support that the government has already put in place may not be effective because of the COVID-19 policies as activities are subdued.”

Uncertainty was also created by the ongoing conflict in Ukraine. U.S. Secretary of State Antony Blinken and Defense Secretary Lloyd Austin arrived in Kyiv for talks, as the conflict precipitated by Russia’s invasion on Feb. 24 enters a third month.

The price of oil dropped towards $100, the fourth week in a row. This was due to fuel demand concerns arising from the recent COVID-19 China outbreaks.

Data-wise, Australia will release its data on Wednesday. The U.S. will publish its quarterly report for 2022 the day after that. Investors can also look forward to earnings releases from Alphabet Inc. (NASDAQ), Meta Platforms Inc. [NASDAQ:], Amazon.com Inc./NASDAQ, and Apple Inc.