The Asia-Pacific stock market was mostly up Wednesday morning as investors realized the likelihood of de-escalation in Ukraine and lower oil prices.

Japan’s Nikkei 225 index was down 1.27% by 22:29 Eastern Time (02:29 GMT); with retail sales for February 2022 down 0.8% year-on-year.

South Korea’s KOSPI 50 rose 0.27%, while Australia’s ASX 200 gained 0.8%.

Hong Kong’s Hang Seng Index rose 0.85%.

China’s Shanghai Composite added 0.63% and the Shenzhen Component jumped 1.41%.

Oil recovered some of its losses early in the Asian trading session, but investors remain wary of the end of the military special operation. Russia said it would sharply reduce activity near the Ukrainian capital Kiev, while chief negotiator Vladimir Medinsky said it would take steps to “de-escalate” the conflict.

However, talks between Ukraine and Russia on Tuesday failed to produce a ceasefire agreement.

Hopes that Ukraine and Russia could make progress in peace talks have led to lower oil prices and inflation expectations, giving bonds a respite after recent falls. Long-term bond yields fell, leading to a brief inversion in the yield curve for 2- and 10-year securities. While this inversion usually portends an impending recession, its accuracy is questionable after several years of strong stimulus.

The inversion of the U.S. Treasury yield curve has sparked debate about the downside risks to growth as central banks begin to tighten their monetary policies. They include the U.S. Federal Reserve, which is expected to keep raising interest rates through 2022.

“We knew we were at the end of the cycle and typically the yield curve inverts, but it takes 18 to 24 months to actually go into recession,” Pacific Investment Management Co. portfolio manager Erin Brown said in an interview with Bloomberg. Erin Brown.

“There are reasons to believe that yield curve inversion may not be as good an indicator this time as in the past, especially given the sheer amount of quantitative easing undertaken by the world’s central banks,” she added.

Federal Reserve Bank of Philadelphia Governor Patrick Harker said he expects a series of “deliberate and methodical” rate hikes in 2022, but said he is prepared to raise the rate by half a point in May if short-term data show rising inflation. Harker’s colleagues, Richmond FRB Governor Thomas Barkin and New York FRB Governor John Williams, will speak on Wednesday and Thursday, respectively.

According to the latest US economic data, the Consumer Confidence Index from the Conference Board (CB) stood at 107.2 for March 2022, while job openings from JOLT totaled 11.266 million. Additional data, including GDP and the latest employment report, including US non-farm payrolls, will be released later today and Friday, respectively.

As for the Asia-Pacific region, China will release its manufacturing and non-manufacturing business activity indices (PMIs) on Thursday and Caixin’s manufacturing PMI on Friday.