By Gina Lee

Investing.com – Asia Pacific stocks were mostly up on Thursday morning, as and the bond market dialed back bets on aggressive interest rate hikes from the U.S. Federal Reserve.

Japan’s jumped 1.12% by 11:08 PM ET (3:08 AM GMT) while South Korea’s inched down 0.05%

The Australian dollar was 0.45% higher than the previous March, according to employment data. It was 17.900 in Australia and 20,500 at the time of writing.

Hong Kong’s was up 0.31%.

China’s gained 0.66% and the was up 0.35%.

The People’s Bank of China is expected to cut the one-year policy loans interest rate on Friday, the second time it would be doing so in 2022 to date. Due to the recent COVID-19 crisis, the central bank may also reduce its reserve requirements ratio.

Investors may be readjusting their wagers about how quickly the Fed will tighten its monetary policy by noticing an upward trend in U.S. Treasuries with shorter maturities. Tuesday’s data spurred cautious optimism that inflation is peaking, although producer price index (PPI) data released a day later reminded investors not to jump too quickly to conclusions.

In March, the PPI increased by 11.2% and 1.4%, and core PPI rose 9.2% & 1%, respectively.

Concerns about the tight supply of oil continue to drive prices up, with crude oil trading at around $104. Commodity-driven inflation, exacerbated by the war in Ukraine precipitated by Russia’s invasion on Feb. 24, continues to impact the economy and investor sentiment.

Inflation and the conflict were creating “significant” challenges, according to JPMorgan Chase & Co. CEO Jamie Dimon, with the firm among the first big U.S. banks reporting earnings for the first quarter of 2022.

“Fed rate hike expectations will get tested in the coming months” partly on geopolitical risks, OANDA senior market analyst Ed Moya said in a note.

The European Union warned its member states that Russian President Vladimir Putin’s demand that “unfriendly countries” pay for Russian gas in rubles would violate sanctions. Putin made threats to suspend gas supplies to any buyer who does not agree to the demand. U.S. military support to Ukraine is expected to increase by $800million.

The Fed raised its interest rate by 1.5% while it issued its most recent policy decision. The Fed will give its own decision while Patrick Harker and Loretta Mester from the Philadelphia Fed speak later in the afternoon.

U.S. data including and is due to be available later in the day. Australia, Hong Kong and the U.S. will all be closed on Friday due to a holiday.