By Gina Lee – Asia Pacific stocks were mostly down Thursday morning. U.S. shares and Treasuries gained after the U.S. Federal Reserve said in its latest policy meeting minutes that more evidence of a robust economic recovery from COVID-19 would be needed to set an asset tapering timeline.

Japan’s Nikkei 225 fell 0.70% by 10:39 PM ET (2:39 AM GMT), ahead of a decision on declaring a fresh state of emergency in the country due later in the day. Japanese economy minister Yasutoshi Nishimura told an advisory panel on Thursday that the move, covering Tokyo, would be in place from Jul. 12 to Aug. 22.

The proposed period also covers the entire duration of the Tokyo Olympic Games. A decision in favor of the state of emergency could see spectators banned from the games, which are due to open in less than three weeks.

South Korea’s KOSPI fell 0.72%. The country reported 1,275 daily COVID-19 cases as of Jul. 8, with the number exceeding the record set in December 2020.

In Australia, the ASX 200 was up 0.28% while Hong Kong’s Hang Seng Index slid 1.92%.

China’s Shanghai Composite was down 0.55% while the Shenzhen Component was gained 0.52%, with the consumer price index and producer price index due to be released on Friday. Also on investors’ radar is a State Council hint that the People's Bank of China could cut its reserve requirement ratio for banks to give the economy a boost.

U.S. shares closed at all-time highs, while benchmark ten-year U.S. Treasury yields steadied around 1.31%, after falling for seven trading days, as inflation expectations continue to decrease.

The minutes from the Fed’s June meeting, released on Wednesday, did not provide the hoped-for clues to the central bank’s asset tapering schedule.

The Fed took markets by surprise with its hawkish tone when it handed down its latest policy decision in June. Although ongoing uncertainty about the economic recovery made officials reluctant to communicate this schedule, they wanted to be prepared should asset tapering be needed sooner than expected.

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Across the Atlantic, the European Central Bank reportedly raised its inflation goal to 2% and allow room for any required overshoot. Finance ministers and central bankers from the Group of 20, or G20, will also meet in Venice on Friday.

Some investors remain optimistic, however.

“I think the Goldilocks scenario will last for quite a while… we are at a point where the central banks all over the world have very much a desire to keep interest rates low and fortunately, we have not seen any long-term significant signs of inflation,” Dalton Investments chair Belita Ong told Bloomberg.

Meanwhile, the number of COVID-19 deaths passed the four million mark as of Jul. 8, according to Johns Hopkins University data.

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