Asian stocks face downward pressure at the start of trading Thursday after US equities extended declines, with Federal Reserve Chair Jerome Powell sticking to the script of higher rates to combat inflation.

Contracts for benchmarks in Australia and Japan posted modest losses after both the S&P 500 and Nasdaq 100 fell for a third day Wednesday, with the tech-heavy benchmark bearing the brunt of the selloff, dropping more than 1%. Markets in Hong Kong and mainland China are closed Thursday for holidays.

Powell renewed his warning that higher rates are needed, saying two more rate hikes this year is “a pretty good guess,” while backing the central bank’s 2% inflation target during his semi-annual report to Congress. Separately, Atlanta Fed President Raphael Bostic said he supports holding the central bank’s target-rate level while noting the “bar to justify further rate hikes is higher than it was a few months ago.” Chicago Fed chief Austan Goolsbee said the decision to hold rates steady last week was a “close call.

Shorter maturity Treasuries reacted the most, pushing the inversion of a key segment of the yield curve to a full percentage point for the first time since March as Powell’s signal of higher rates fanned recession worries.

The hawkish Fed signaling has combined with crowded bullish positioning, narrow breadth and stretched valuations to sap investor enthusiasm for the second-quarter stock rally. The market’s fear gauge, the Cboe Volatility Index or VIX, was strangely placid, dropping to the lowest since January 2020.

“The positioning and the chasing is no longer likely to be the big tailwind that it was for the last six or seven weeks,” Anastasia Amoroso, chief investment strategist at iCapital, said on Bloomberg Television before Powell’s speech. “That’s why, things go parabolic, they don’t do so in perpetuity.”

Other central banks will also be in focus Thursday for markets, with a wave of decisions spanning Asia and Europe. Among them, policymakers are seen keeping rates on hold in Philippines and Indonesia and raising them in Switzerland, Norway and the UK.

Traders are betting the Bank of England will have to accelerate the pace of interest-rate hikes after data Wednesday showed inflation remained at 8.7%, higher than expected for a fourth month. While the BOE is seen raising rates by 25 basis points to 4.75%, the risk of a larger half-point increase is growing, and is now fully priced by August. Traders also lifted expectations for the terminal rate to 6%, which would be the highest since the turn of the century. Two-year gilt yields rose to levels last seen in 2008.

Turkey’s decision holds a notable place on the calendar, with analysts unanimous the central bank will raise rates for the first time in more than two years after two former Wall Street bankers are now at the controls of the economy.

Elsewhere, crude climbed above $72 a barrel on Wednesday and Bitcoin rallied past $30,000 for the first time since April amid speculation over BlackRock Inc.’s surprising filing for a US spot Bitcoin exchange-traded fund.

Key events this week:

• Eurozone consumer confidence, Thursday
• Rate decisions in UK, Switzerland, Indonesia, Norway, Mexico, Philippines, Turkey, Thursday
• US Conference Board leading index, initial jobless claims, current account, existing home sales, Thursday
• Fed’s Powell delivers testimony before the Senate Banking Committee, Thursday
• Cleveland Fed’s Loretta Mester speaks Thursday
• Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday
• Japan CPI, Friday
• US S&P Global Manufacturing PMI, Friday
• St. Louis Fed President James Bullard speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 7:15 a.m. Tokyo time. The S&P 500 fell 0.5%
• Nasdaq 100 futures were little changed. The Nasdaq 100 fell 1.35%
• Nikkei 225 futures fell 0.2%
• Australia’s S&P/ASX 200 Index futures fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.3%
• The euro was little changed at $1.0987
• The Japanese yen was little changed at 141.81 per dollar
• The offshore yuan was little changed at 7.1777 per dollar
• The Australian dollar was little changed at $0.6799

Cryptocurrencies

• Bitcoin fell 0.1% to $29,946.63
• Ether was little changed at $1,878.62

Bonds

• The yield on 10-year Treasuries was little changed at 3.72%

Commodities

• West Texas Intermediate crude was little changed

This story was produced with the assistance of Bloomberg Automation.