Asian share markets slipped on Wednesday, as the prospect of an interest rate cut by the United States Federal Reserve was overshadowed by worries that a China-US first-stage trade deal could be delayed.
The Reuters news agency quoted a US administration official as saying an interim trade agreement between Washington and Beijing might not be completed in time for signing in Chile next month as markets had expected.
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 falling 0.08 percent by the close.
A disappointing profit report from Google parent Alphabet kept the technology-rich Nasdaq in the red, with the Nasdaq Composite losing 0.59 percent.
MSCI’s gauge of stocks across the globe lost 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 points 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.
The British pound wobbled after the United Kingdom decided to hold an election on December 12 following Prime Minister Boris Johnson winning approval from parliament for an early ballot aimed at breaking the Brexit deadlock.
While Johnson wants to secure a parliamentary majority to ratify his Brexit deal, the election would be highly unpredictable because Brexit has fatigued and enraged many voters, while eroding traditional loyalties to the two major parties, Conservative and Labour.
The currency last traded at $1.2861.
Oil prices slipped after an industry report that oil reserves at the Cushing delivery hub in the US rose last week, shrugging off a drop in overall inventories.
US West Texas Intermediate (WTI) crude lost 0.47 percent to $55.28 per barrel while international benchmark Brent crude futures dropped 0.19 percent to $61.47 a barrel.