TOKYO- Asian share markets slipped, as the prospect of a rate cut by the Federal Reserve was countered by worries a Sino-US first-stage trade deal could be delayed.
MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.33 percent from Tuesday’s three-month high while Japan’s Nikkei lost 0.35 percent after hitting a one-year high the previous day.
On Wall Street overnight, the S&P 500 index touched a record intraday high, led by strong earnings from drug manufacturers such as Merck and Pfizer, before ending down 0.08 percent.
Markets had erased gains after Reuters reported a US administration official said an interim trade agreement between Washington and Beijing might not be completed in time for signing in Chile next month as expected.
A disappointing profit report from Google parent Alphabet kept the technology-rich Nasdaq in the red, with the Nasdaq Composite falling 0.59 percent.
MSCI’s gauge of stocks across the globe slipped 0.06 percent in Asia on Wednesday from a 21-month high reached on Tuesday.
Since US President Donald Trump outlined what he called the first phase of a trade deal with China earlier this month, investors have bet on a trade truce between the two countries, driving global equities higher.
Expectations of further US monetary policy loosening also emboldened investors, with a reduction of 0.25 percentage point later in the day almost seen as a done deal.
“With a cut today completely priced in, markets are looking to the Fed’s stance on its policy outlook,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.
While Fed funds rate futures fully price in a 25- basis-point cut on Wednesday, only about a 30 percent chance of another cut in December has been priced in, compared with about 70 percent earlier this month.
“I think the Fed will clearly indicate that a rate cut in December is not its main scenario,” said Tomoaki Shishido, macro strategist at Nomura Securities.
Fading expectations of aggressive rate cuts by the Fed have lifted the two-year US bond yield to 1.644 percent, compared with a two-year low of 1.368 percent in early October. – Reuters