By Gina Lee

– Asia Pacific stocks were down on Monday morning as China cuts its benchmark loan rate for the first time in almost two years. Investors remain concerned about the spread of omicron variants and the U.S. tightening monetary policy.

Japan’s Nikkei 225 fell 1.86% by 9:52 PM ET (2:52 AM GMT) ahead of a speech by the Bank of Japan Governor Haruhiko Kuroda on Thursday.

South Korea’s KOSPI fell 1.33%.

In Australia, the ASX 200 was down 0.31%. The Reserve Bank of Australia is due to release minutes of its December interest rate meeting on Tuesday.

Hong Kong’s Hang Seng Index was down 1.07%.

China’s Shanghai Composite was down 0.70% while the Shenzhen Component down 0.76%. China cut its one-year loan prime rate from 3.85% to 3.8%, the first such move since April 2020.

In the U.S., investors expect a diminishing central bank stimulus as officials step up efforts to contain inflation. Federal Reserve Governor Christopher Waller expects the central bank will start raising its interest rate as early as March 2022 when the Fed decided to end the purchase program a few months earlier than had been planned.

Meanwhile, a Democratic senator Joe Manchin said he would not support a $2 trillion social spending plan.

On the COVID-19 front, U.S. President Joe Biden’s top medical adviser Anthony Fauci said a shutdown will not be necessary despite a surge in cases. But he said the hospital will see a rush of cases from the Omicron variant.

“Omicron remains a concern and cases are on the rise,” Robert Schein, chief investment officer at Blanke Schein Wealth Management, told Bloomberg. “Investors should be prepared for COVID-19 to continue to be a main factor in market performance heading into 2022. After the bull run we’ve seen over the past 21 months, investors aren’t as used to prolonged periods of volatility.”