Asia-Pacific stock indices were mostly down on Wednesday morning; with U.S. futures also trending lower. Sovereign bonds continued to sell off as high inflation, hawkish measures by the US Federal Reserve and the COVID-19 outbreak in China continue to be on investors’ radar.

Japan’s Nikkei 225 index added 0.49% by 22:37 Eastern Time (02:37 GMT). The country’s trade data released this morning showed that Chinese exports rose 14.7% year-on-year in March 2022, while imports rose 31.2% year-on-year. The trade balance narrowed to 412.4 billion yen ($3.21 billion) and the adjusted trade balance shrank to 900 billion yen.

South Korea’s KOSPI was down 0.35% and Australia’s ASX 200 was up 0.34%.

Hong Kong’s Hang Seng index fell 0.39%.

China’s Shanghai Composite fell 0.59% and the Shenzhen Component fell 0.82%. The People’s Bank of China kept its main lending rate (LPR) unchanged, with the one-year LPR at 3.7% and the 5-year LPR at 4.6%.

Nasdaq 100 futures fell about 1% on Tuesday after Netflix Inc. shares fell due to fewer than expected subscribers. U.S. Treasury yields rose as investors increased bets on a sharp tightening of the Federal Reserve’s monetary policy to curb high inflation, with real 10-year bond yields turning positive for the first time since 2020.

Tighter financial conditions could also hurt demand for assets such as stocks, as Chicago FRB head Charles Evans warned that the interest rate is likely to exceed the neutral level.

Evans, along with San Francisco FRB head Mary Daly, are also scheduled to speak somewhat later today. U.S. Fed chief Jerome Powell and European Central Bank head Christine Lagarde will speak at an International Monetary Fund (IMF) event on Thursday, while Bank of England Governor Andrew Bailey will speak a day later.

The Fed will also release its Beige Book a little later today, with the eurozone consumer price index to be released on Thursday and business activity indices for the eurozone, France, Germany and the UK on Friday.

The IMF cut its global growth forecast amid high inflation, the conflict in Ukraine and the COVID-19 outbreak in China.

Stock and bond markets are vulnerable as the Federal Reserve and the world’s other central banks may tighten monetary policy more than expected to curb inflation, as IMF economic adviser Pierre-Olivier Gourinchas said in a blog post on Tuesday.

“It takes time for the market to recognize and respond to higher inflation,” Dalton Investments LLC Chairwoman Belita Ong said in an interview with Bloomberg.

“My concern is that we have benefited from low interest rates in an era of peace, no wars and significant globalization. Both of those trends are now reversing.”

Investors now await reports from American Express Company, China Telecom and Tesla Inc. They will also be watching the presidential debate between Emmanuel Macron and Marine Le Pen later today just ahead of the second round of voting on April 24.