Asian equities edged higher on Thursday, propped up by Hong Kong and China stocks even as growing fears of an economic slowdown and worries over the pace of the Federal Reserve’s interest rate hikes weighed on sentiment.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up 0.19%, set to snap a two-day losing streak. China’s stock market (.SSEC) was 0.12% higher, with Hong Kong’s Hang Seng Index (.HSI) surging nearly 2%.

The gains in Chinese shares came after some investors booked profits on Wednesday after the government announced sweeping changes to ease a tough anti-COVID policy that has battered the world’s second-largest economy.

Elsewhere in Asia, Australia’s S&P/ASX 200 index (.AXJO) lost 0.67%, while Japan’s Nikkei (.N225) fell to near one-month low.

The market generally struggled for direction as traders digested data showing that U.S. worker productivity rebounded at a slightly faster pace than initially thought in the third quarter, but the trend remained weak, keeping labour costs elevated.

Increasing fears that the U.S. central bank might stick to a longer rate-hike cycle in the wake of strong jobs and service-sector reports has crimped investors’ risk appetite.

Also weighing on the equities market was U.S. Treasury yields, with five-year notes to 30-year bonds hovering at three-month lows.

“The thing that stands out is what’s going on U.S. Treasury market, there does not seem to be a lot behind the moves and I think that’s what driving most of the rest of the market,” said Rob Carnell, head of ING’s Asia-Pacific research.

“Ahead of the FOMC next week, we may see range trading a little bit.”

Wall Street closed lower on Wednesday, with the benchmark S&P 500 (.SPX) declining for the fifth straight session, while the tech-heavy Nasdaq (.IXIC) finished lower for the fourth day in a row.

Many in the market believe inflation is moderating and bond yields have peaked, allowing central banks to begin slowing rate hikes when policy-makers from the Fed, the Bank of England and the European Central Bank meet next week.

The Fed is widely expected to raise interest rates by 50 basis points next week after delivering four consecutive 75 bps hikes.

The Bank of Canada on Wednesday hinted that its historic tightening campaign was near an end as it raised benchmark overnight interest rates by 50 basis points to 4.25%, the highest level in almost 15 years.

Meanwhile, the yield on 10-year Treasury notes was up 4.3 basis points (bps) to 3.451%, while the yield on the 30-year Treasury bond was up 3.4 bps to 3.448%. Yields on both notes touched three month lows on Wednesday.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 3.9 bps at 4.296%.

In the currency market, the dollar index rose 0.171%, with the euro down 0.05% to $1.05, while sterling was last trading at $1.2184, down 0.12% on the day.

Oil prices steadied in early Asian trade on Thursday after sinking to their lowest level this year.

U.S. crude rose 0.96% to $72.70 per barrel and Brent was at $77.79, up 0.8% on the day.