Sentiment has taken a hit in recent weeks owing to a spike in US Treasury yields to around 15-year highs, fueled by expectations that a strong economy will allow the Federal Reserve to stick to its campaign of monetary tightening.

That has forced investors to push back their expectations of when borrowing costs will eventually come down, having just a few months ago been betting on a cut by the end of the year.

All eyes are on a planned speech Friday by Fed chief Jerome Powell, with dealers hoping for some clarity on its plans to keep inflation on a downward path and held at the bank's two percent target.

Forecasts are for a reiteration of his previous remarks that the goal is taming prices, even with rates already at 22-year highs.

"It's not the height of rates that matters as much as how long they stay high," said Tom Essaye, founder and president of Sevens Report Research.

"If we see Powell hint at higher for longer on Friday, we will need to brace for more equity market volatility."

Investors are also awaiting earnings from Nvidia, which is tipped to post forecast-busting revenue in the second quarter thanks to the surge in demand for its processors used in developing artificial intelligence applications.

The firm's shares have rocketed this year, helping boost many other tech firms, even as traders fret over the impact of higher borrowing costs on their bottom lines.

Tech companies are largely susceptible to elevated rates owing to their use of debt to fuel growth.

However, National Australia Bank's Rodrigo Catril said: "There are some concerns the chipmaker may have experienced supply constraints against what seems to be an unquenchable demand for its products.

"Nvidia's performance is seen by many as a potential bellwether for the IT sector and markets in general."

A rally in Nvidia helped propel gains in global markets earlier this week, though traders could not keep up the buying owing to ongoing rate worries.

While the Nasdaq edged up slightly, the S&P 500 and Dow fell. 

And Asia fluctuated throughout the morning.

Hong Kong, Tokyo, Sydney, Singapore, Wellington and Taipei were slightly higher but Shanghai, Seoul and Manila fell.

China's economic woes also continue to have a negative impact on risk sentiment, with the main cause of worry being its sputtering property sector.

Real estate titan Country Garden -- which is drowning in a sea of debt -- stands on the verge of default, fueling worries of contagion throughout the financial system domestically and possibly globally.

While Beijing has introduced some measures to stimulate the economy and support developers, they have been piecemeal and met with a shrug by investors, who are calling for a wide-ranging stimulus.

Alicia Garcia Herrero at Natixis said the best way to help would be to ease tough restrictions imposed on the industry in 2020 to stop speculation and wide-ranging borrowing.

She added: "Chinese policymakers should focus on limiting potential spillovers into the financial sector and thereby systemic risk. The longer they wait to do so, the bigger the cost will be."