SYDNEY- Asian shares tracked Wall Street lower on Wednesday as US yields stood near four-month highs, while a powerful earthquake in the region raised concerns about possible disruptions to the vital chip-making industry.
Europe is set for a subdued open, with EUROSTOXX 50 futures little changed and FTSE futures easing 0.3 percent . Wall Street stock futures were off 0.2 percent as investors pondered the risk of fewer rate cuts ahead of an appearance from Federal Reserve Chair Jerome Powell and US services and jobs figures due later in the day.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7 percent . Japan’s Nikkei dropped 0.8 percent , after a 20 percent blockbuster rally in the first quarter.
Taiwan’s shares skidded 0.5 percent after a 7.2 magnitude earthquake rocked the island, collapsing buildings, killing at least four people and injuring dozens.
Taiwan makes up about 90 percent of chipmaker TSMC’s production. The group’s shares fell 0.9 percent after it said some facilities were evacuated following the quake. It later said evacuated employees were beginning to return to work.
China’s blue chips eased 0.2 percent while Hong Kong’s Hang Seng index fell 0.8 percent , even as a private sector survey showed the expansion in the services industry picked up pace in March.
On Wall Street, a recent run of solid US economic data – including an unexpected expansion in the manufacturing sector and the slow easing in the labor market – has stoked doubts about the amount of the Fed easing likely this year and next.
A pair of Fed policymakers on Tuesday both said they think it would be “reasonable” to cut US interest rates three times this year, but markets only see about 69 basis points in easing.
“At this last meeting, they still indicate three times, but these movements tend to have some momentum. As they start to shift, you find that they will probably shift again next meeting and then by next meeting, they probably will be indicating that they’re going to cut only twice,” said Andrew Lilley, chief rates strategist at Barrenjoey in Sydney.
“And there’s a very high chance of one in three that they don’t ease at all.”
