FX.co ★ Asian Shares Retreat On Rate Worries

Asian stock markets faced a significant drop on Wednesday, following robust U.S. economic data that weakened hopes for interest rate cuts. This, along with mounting tensions in the Middle East that could impact oil prices, has brought uncertainty to the inflation forecast.

Investors are now looking towards Federal Reserve Chairman Jerome Powell's impending speech and the upcoming release of the U.S. non-farm payroll data on Friday. They hope these might provide more insight into the Federal Reserve's future actions regarding monetary easing.

Gold prices fell slightly due to conflicting opinions from Federal Reserve officials, whilst crude prices rose over concerns with crude and fuel supplies.

Despite a recent private survey revealing expected growth in China's service sector for March, the Shanghai Composite index declined by 0.18 percent to reach 3,069.30. Following a devastating earthquake in Taiwan, Hong Kong's Hang Seng index fell from its near three-week high by 1.22 percent, settling at 16,725.10.

In Japan, markets also closed significantly lower due to concerns that persistent inflation and a strong U.S. economy may cause the Federal Reserve to delay its rate cuts. Notably, Japan's Nikkei fell 0.97 percent to 39,451.85, with Nippon Steel, Advantest, Fast Retailing, and Nintendo experiencing losses between 2 and 4 percent.

However, Japan's service sector activity saw its fastest expansion in seven months, according to a recent survey.

In contrast, Seoul experienced a break in its three-day win streak as technological, battery, and auto stocks led falls, resulting in the Kospi average plunging 1.68 percent to 2,706.97.

Australian markets also declined, due to losses in the finance, healthcare, and real estate sectors. Consequently, the benchmark S&P ASX 200 dropped 1.34 percent to 7,782.50, and the broader All Ordinaries index fell 1.38 percent to 8,033.60.

In nearby New Zealand, the benchmark S&P NZX-50 index decreased by 0.46 percent, ending at 12,040.49.

After Federal Reserve officials signaled prolonged high interest rates, U.S. stocks also ended on a low note, especially as job openings and factory orders exceeded expectations, leading to doubts over the Federal Reserve's easing pace. The Dow lost 1 percent, S&P 500 slipped 0.7 percent, and the Nasdaq Composite declined by 1 percent.