On Friday morning, stock indices in the Asia-Pacific region declined due to the fact that the head of the U.S. Federal Reserve Jerome Powell tightened his stance on inflation. Investors are now expecting a more decisive tightening of monetary policy.

Japan’s Nikkei 225 index was down 1.96% by 22:01 Eastern Time (02:02 GMT). Data released this morning showed that the nation’s consumer price index (CPI) rose 0.4% month-over-month, the national core CPI rose 0.8% year-over-year, and the national CPI rose 1.2% year-over-year in March 2022. The manufacturing business activity index (PMI) for April came in at 53.4. and Japan also released its services PMI.

South Korea’s KOSPI fell 1.05% and Australia’s ASX 200 fell 1.74%.

Hong Kong’s Hang Seng index fell 1.27%.

China’s Shanghai Composite fell 0.08% and the Shenzhen Component fell 0.75%.

Shorter maturity bonds fueled a fresh drop in US Treasuries; with the market betting on 3 consecutive half-point interest rate hikes by the Fed, which would be the sharpest tightening since 1982. Powell has also indicated that such hikes are possible, while recognizing the feasibility of the idea of a “leading edge hike”.

Part of the U.S. Treasury yield curve was inverted again, while bonds in Australia and New Zealand also fell. Oil prices remain above $103 a barrel as supply disruptions due to the conflict in Ukraine continue to push up energy costs. Rising costs have allayed fears over fuel demand as restrictions due to COVID-19 in China continue.

Central banks’ efforts to curb the highest inflation in a generation are also dampening investor sentiment, increasing market volatility and overshadowing earnings reports that have gotten off to a strong start.

“Right now, stocks are really torn between these two forces, and the first one is that corporate earnings are actually pretty good,” Anastasia Amoroso, chief investment strategist at iCapital Securities LLC, said in an interview with Bloomberg.

“But every time stocks go up, it seems like Fed officials are starting to speak from more and more hawkish positions,” she added.

Meanwhile, about 80% of firms in the U.S. reported better-than-expected earnings. Among them was Tesla (NASDAQ:TSLA), whose shares rose after it reported record profits. Tesla CEO Ilon Musk is also preparing funds on an offer to buy Twitter (NYSE:TWTR).

In the Asia-Pacific region, Didi Global Inc ADR (NYSE:DIDI)’s situation is more uncertain. Senior Chinese officials are objecting to proposed penalties for the cab company as it prepares to delist from the New York Stock Exchange and due to regulatory concerns. The Nasdaq Golden Dragon China index fell on Thursday.

Attempts by the country’s government to calm fears by promising stability have had limited success. The China Securities Regulatory Commission said in a statement that it met with institutional investors, including the National Social Security Fund, banks and insurance companies, on Thursday and asked them to increase their equity investments.

Investors are now waiting for manufacturing PMI data from the eurozone, France, Germany and the UK, due out a little later today.