By Gina Lee

– Asia Pacific stocks were down on Tuesday morning, even as Australia released better-than-expected retail sales data.

Japan’s Nikkei 225 slid 1.28% by 9:02 PM ET (2:02 AM GMT), re-opening after a holiday. South Korea’s KOSPI was down 0.44%.

In Australia, the ASX 200 fell 0.85%, with retail sales growing 7.3% month-on-month in November. The trade balance was AUD9.423 billion.

Hong Kong’s Hang Seng Index was down 0.50%.

China’s Shanghai Composite edged down 0.12% and the Shenzhen Component was down 0.29%. The country will release its consumer and producer price indexes on Wednesday.

Investors continue to monitor the impact of central banks’ tightening of their monetary policies and the spread of the omicron COVID-19 variant.

“We think eventually this market will shift back toward growth, but we still got some wood to chop there; the valuations haven’t corrected,” RBC Capital Markets head of U.S. equity strategy Lori Calvasina told Bloomberg.

“This is a repricing, it’s painful, it has a little bit more ways to go.”

The U.S. Treasury curve flattened, with short-dated yields climbing sharply as bets of a U.S. Federal Reserve interest rate hike in March 2022 increased and Goldman Sachs Group Inc. predicted four hikes in 2022, starting that month.

U.S. Federal Reserve Chairman Jerome Powell said the U.S. economy was expanding at a fast pace, and the central bank will prevent higher inflation from becoming entrenched, ahead of the Senate confirmation hearing for his re-nomination later in the day. Powell also cautioned that the post-COVID-19 economy could look different from the previous expansion.

The U.S. Senate Banking Committee will also hold a hearing for Fed vice-chair nominee Lael Brainard on Thursday. Other Fed officials due to speak later in the day are Kansas City Fed President Esther George and St. Louis Fed President James Bullard.

On the data front, the U.S. will release the consumer price index and the Fed Beige Book on Wednesday, followed by the producer price index on Thursday.

Giving investor sentiment a boost, however, New York’s virus infections may have reached a peak around a month after the first omicron case was identified in the area. Pfizer Inc. (NYSE:PFE) is also developing a hybrid vaccine that shields against the omicron variant and a new study from Imperial College London showed protective immune “t-cells” triggered by the common cold lessened the chances of contracting COVID-19.