By Gina Lee

Investing.com – Asia Pacific stocks were up on Wednesday morning, with the U.S. Federal Reserve’s tougher stance on inflation driving gains on Wall Street but deepening a Treasury selloff.

Japan’s jumped 2.94% by 11:13 PM ET (3:13 AM GMT) and South Korea’s gained 0.61%.

Australia saw an increase of 0.46%.

Hong Kong’s rose 1.9%.

China’s was up 0.49% and the gained 0.67%.

U.S. contracts were volatile, but they rose for the fifth session after six. However, U.S. Treasuries held its losses from Monday, when Fed Chairman Jerome Powell signaled that a half-point interest-rate hike could be possible at the central bank’s next meeting. The short-term U.S. government bond performance was the worst in nearly 40 years, and Australian and New Zealand bonds also fell.

In response to inflation that has reached 40-year highs due to the conflict in Ukraine, central banks have begun to tighten their monetary policies.

Even the Fed’s more dovish policymakers agree with Powell’s statement that interest rates should be hiked at a quicker pace, with the economy strong enough to weather higher borrowing costs. The message is getting heard on the equity markets, as some investors look to stock investments to protect against inflation.

“We are positive for equities for this year,” Principal Global Investors chief strategist Seema Shah told Bloomberg. While the market may be more challenged in 2023 and recession risks are rising, “we still think the U.S. economy is pretty good fundamentally,” she said.

“Faster hikes are clearly going to help inflation come down,” which may reduce the need for a longer tightening campaign, she added.

After increasing interest rates to 0.5% during its last policy decision, the Fed expects to raise them six times more by 2022. San Francisco Fed President said on Tuesday that it was time to remove policy accommodation, while St. Louis Fed President James Bullard and Cleveland’s Loretta Mester called for faster hikes.

Powell, Christine Lagarde from the European Central Bank, and Andrew Bailey, the Bank of England Governor will all speak to the BIS innovation summit in the latter part of the day.

Economic growth worries are growing as the war in Ukraine remains unresolved. Joe Biden, the U.S. president, and his allies are scheduled to meet in Brussels. There they will announce additional sanctions against Russia for its February 24 invasion of Ukraine. New measures are expected to be introduced to prevent Russia from evading existing economic sanctions.

Investors will be monitoring commodity markets as well. A deal between the U.S.A. and U.K. to reduce tariffs on British Steel and Aluminum could alleviate some inflationary pressures.

U.K. Chancellor Rishi Sunak will deliver his “spring statement” on the budget later in the day, with U.S. data due a day later.