By Gina Lee

Investing.com – Asia Pacific stocks were mostly up on Wednesday morning steadying after U.S. counterparts ended another volatile session. However, investors are on edge ahead of the U.S. Federal Reserve’s .

Japan’s fell 0.46% by 9:06 PM ET (2:06 AM GMT) while South Korea’s was up 0.28%.

Hong Kong’s rose 0.76%.

China’s was up 0.34% and the rose 0.88%.

Australian markets close for holidays

While the closed at its lowest level since Oct 2021, Tuesday’s close was a good sign for the Underperformer.

It is the final decision that will determine the fate of the, to be made later today. While the decision will likely be scrutinized to find clues about an interest rate rise and tapering timeline, it’s widely believed that asset tapering will commence in March 2022.

Frances Stacy, Optimal Capital portfolio strategist, said that while the Fed may encourage more selling if they adopt a hawkish tone but Chairman Jerome Powell would likely state policy is data dependent and supply chains are improving, indicating that inflation could possibly be peaking.

“I think what that’s going to do is potentially reassure markets that the Fed put is ready, willing and able… that could cause some serious enthusiasm and a short squeeze,” she added.

Others investors had a different perspective.

“A moderately hawkish Powell would be dovish in market terms. He would say that while the Fed has committed to keeping inflation under control, he is optimistic that a combination of a few more hikes and some quantitative tightening is enough. That is dovish market pricing,” Standard Chartered PLC’s global head for G-10 FX research Steven Englander stated in a memo.

Global shares have fallen by more than 7% since 2022. The prospect that central banks will withdraw stimulus and slow the recovery of COVID-19 could increase market volatility.

The risk of a “growth shock” to equities is increasing, with the International Monetary Fund cutting its global economic expansion forecast for 2022 due to weaker prospects for the U.S. and China along with persistent inflation, Goldman Sachs Group Inc. strategists warned.

However, Citigroup Inc. strategist Ed Acton took a more positive tone.

“For the Fed, the current risk-asset drawdown certainly makes their job more difficult, but we don’t see the level of financial conditions tightening as commensurate with a dovish message. Instead, the Fed may seek to underline the current inflation risks as a ‘constraint’ on monetary policy going forward,” he said in a note.

Additionally, The will also make its policy decisions later in the day.