By Gina Lee

Investing.com – Asia Pacific stocks were mostly down on Friday morning, and the dollar held firm, as high inflation, tighter monetary policy, and COVID-19 lockdowns in China continue to both darken the economic outlook and depress investor sentiment.

Japan’s edged up 0.14% by 10:43 PM ET (2:43 AM GMT), with Japanese markets re-opening after a holiday. In April 2022 the saw a 2.5% increase in year-on–year and a 0.4% rise month-on-month.

South Korea’s fell 1.41% and in Australia, the slid 2.38%.

Hong Kong’s tumbled 3.20%.

China’s fell 1.48% and the slid 1.89%.

U.S. equity futures fluctuated, although losses were smaller compared to Thursday’s slide of more than 3.5% in the and 5% in the gauge. After U.S. Treasuries dropped, Australian debt declined and the U.S. 10-year Yield climbed above 3.3% while the Dollar remained at the $103 mark.

After the U.S. Federal Reserve ruled against large-scale interest rate increases, the relief rally which swept markets was overturned by fear aversion. Although the Fed raised its interest rate by 1% for the first time since 2000, it did not raise the rates at the extreme margins that some investors were concerned about.

“Valuations become even more sensitive, very sensitive, when rates are going up and that is what we are experiencing,” Invesco chief global market strategist Kristina Hooper told Reuters.

“It’s just getting exacerbated as we get into the thick of monetary-policy tightening in the U.S.”

Investors are now awaiting the U.S. Jobs Report, which is expected to be released later today. Expect solid payroll growth and wage costs to increase inflationary pressures in the report.

The Atlantic Bank raised its interest rate from 1% to 1% on Thursday as it issued its policy decision, its highest ever since 2009. BOE, which joined the increasing number of central banks that tighten monetary policies, warned about double-digit inflation as well as prolonged periods of stagnation and even recession.

The BOE warning comes just a day after Fed Chairman Jerome Powell said controlling inflation could cause “some pain” after the Fed’s policy decision. Fabio Panetta, a member of the European Central Bank Executive Board said that economic growth has nearly halted in the Euro area.

Rising commodity prices contribute to increasing costs. WTI futures were above $108 as supply worries continue to be driven by the European Union’s latest sanctions against Russia. These sanctions are in reaction to Ukraine’s war, which was triggered by Russia’s invasion of February 24th.

Meanwhile, China’s COVID-19 lockdowns also remain concerning, with China’s seven-member Politburo Standing Committee re-iterating its support for the country’s COVID zero strategy.