TOKYO (AP) — Asian stocks were mostly lower on Wednesday as investors awaited a widely expected interest rate hike by the U.S. Federal Reserve, which is working to quell the highest inflation in decades.

Japan’s benchmark Nikkei 225 index fell 1.4% in morning trade to 27,308.66. Australia’s S&P/ASX 200 fell 1.4% to 6,712.40. South Korea’s Kospi lost 0.9% to 2,346.62. Hong Kong’s Hang Seng fell 1.4% to 18,524.48, while the Shanghai Composite fell 0.2% to 3,115.08.

Global tensions add to the uncertainty. Russian-controlled regions of eastern and southern Ukraine announced plans to start voting this week to become integral parts of Russia.

Kremlin-backed attempts to absorb the four regions could set the stage for Moscow to escalate its war against Ukraine. President of Russia Vladimir Putin recently exploded what he called a US effort to maintain its global dominance and ordered officials to increase weapons production.

“On Wednesday, Asian shares traded in a defensive mode. There was some geopolitical tension with Russia and Ukraine, where separatists are going to hold referendums in some regions, and traders were waiting for news from Putin,” said Anderson Alves of ActivTrades.

On Wall Street, the S&P 500 fell 1.1% to 3,855.93 as more than 90% of stocks and every sector in the benchmark index lost ground. The Dow Jones industrial average lost 1% to 30,706.23. The Nasdaq also fell 1% to 11,425.05.

The sales happened while the traders were waiting how high the Fed will raise interest rates at the meeting, which will conclude on Wednesday.

“The market is definitely preparing for the worst and you’re seeing a little bit of selling pressure,” said Paul Kim, CEO of Simplify ETF.

Retailers, technology stocks, healthcare companies and banks were among the biggest weights in the market. Best Buy fell 4.1%, Microsoft fell 0.8%, Abbott Laboratories fell 1.7% and JPMorgan Chase closed 2% lower. Exxon Mobil fell 0.8%.

Shares of smaller companies fell more than the broader market. The Russell 2000 fell 1.4% to 1,787.50.

Bond yields mostly rose. The yield on the 10-year Treasury note, which influences mortgage rates, rose to 3.56% from 3.52% late Monday and traded at its highest level since 2011.

The yield on 2-year Treasuries, which tends to match expectations for Fed action, was steady at 3.95%, hovering near its highest level since 2007.

Stocks fall and Treasury yields rise as the Fed raises borrowing costs in hopes of slowing the hottest inflation in four decades.

Fed Chairman Jerome Powell bluntly warned in a speech last month that rate hikes “will hurt.”

“He’s done everything he can to make it clear that this is going to be another aggressive move,” said Liz Young, SoFi’s head of investment strategy.

The Fed is expected to raise its key short-term rate by three-quarters of a basis point for a third time at Wednesday’s meeting. That would lift the prime rate, which affects many consumer and business loans, to a range of 3% to 3.25%, the highest level in 14 years, up from zero at the start of the year.

Beyond that, investors will be focused on what Powell has to say, both in the Fed’s latest statement on interest rate policy and during the afternoon press conference to see whether the central bank remains primarily focused on reducing inflation, or whether hint the Fed is paying more attention to the impact of higher rates on the economy.

Wall Street worries that rate hikes could go too far in slowing economic growth and push the economy into recession.

Ford fell 12.3% in the S&P 500’s biggest drop since its third-quarter profit outlook was downgraded because parts shortages will leave its lots with 45,000 vehicles left unfinished when the quarter ends on Sept. 30. Last week FedEx and General Electric warned investors about the damage to their business from inflation.

The US is not alone in suffering from runaway inflation or dealing with the effects of efforts to combat high prices.

The Bank of Japan began a two-day monetary policy meeting on Wednesday, although analysts expect the central bank to stick with its easy monetary policy. Next come the rate decisions of Norway, Switzerland and the Bank of England.

In electronic trading of the New York Mercantile Exchange, the price of US benchmark crude oil rose by 15 cents to $84.09 per barrel. It fell 1.5% on Tuesday, weighing on energy stocks. Brent crude, the international standard, added 22 cents to $90.84 a barrel.

In foreign exchange, the US dollar rose to 143.81 Japanese yen from 143.74 yen. The euro fell to 99.64 cents from 99.73 cents.

AP Business writers Damian J. Troise and Alex Veiga contributed to this report.

Yuri Kageyama is on Twitter

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