Equities fell in Asia as investors took a step back after recent gains, with the focus now turning to a key speech by Federal Reserve boss Jerome Powell at the end of the week.
Asian shares flatlined on Wednesday as worries about global recession and endless trade wars wrestled with hopes for more monetary and fiscal stimulus to keep growth going.
Much depends on what the Federal Reserve does with US interest rates, making markets hyper-sensitive to the recent meeting's minutes –– due later on Wednesday –– of its most recent meeting.
Traders are also awaiting the central bank's annual Jackson Hole seminar later this week and a Group of Seven summit this weekend for clues on what additional steps policymakers will take to boost economic growth.
Rising hopes for China-US trade talks have provided a much-needed lift to markets over the previous two days but with few fresh catalysts, dealers are keeping their powder dry ahead of Fed chairman Jerome Powell Friday's address.
After positive signals from US President Donald Trump and some of his top advisers on Monday over progress in the talks with Beijing, and an olive branch with the delay of a ban on Huawei purchases, there have been few developments for traders to buy on.
"Our trade-war headline-inspired relief rally appears to have run its course as I suspect there is still a lot of nervousness among US investors as the global economic realities are just too hard to ignore," said Stephen Innes at Valour Markets.
Waiting on Powell
Asian stock markets followed Wall Street lower on Wednesday as investors looked ahead for signs of possible plans for more US interest rate cuts.
US stocks fell on Tuesday after another slide in bond yields and a mixed batch of corporate earnings.
Financial sector stocks led the declines. Investors looked ahead to the Federal Reserve's Wednesday release of notes from its policymaking meeting last month and Powell's Friday speech.
Federal Reserve officials at their recent meeting believed the central bank could remain "patient" in deciding when to adjust interest rates, though some officials thought future rate hikes might still be needed.
Markets have "entered a holding pattern" ahead of Powell's speech at an annual gathering in Jackson Hole, Wyoming, said Jeffrey Halley of Oanda in a report.
Investors expect Powell to signal the Federal Reserve "is about to embark on a reinvigorated wave of easing," said Halley. However, he said US data "simply does not support the need for an aggressive easing cycle."
The Shanghai Composite Index lost 0.5 points to 2,880.52 and Tokyo's Nikkei 225 shed 0.4 percent to 20,603.43. Hong Kong's Hang Seng inched up 0.1 percent to 26,260.52.
Seoul's Kospi gained 0.5 points to 1,961.02 while Sydney's S&P-ASX 200 fell 1.1 percent to 6,473.00. India's Sensex gained 10 points to 37,338.00.
Taiwan, New Zealand and Southeast Asian markets retreated.
US stock market
On Wall Street, the benchmark S&P 500 index snapped a three-day winning streak Tuesday and fell 0.8 percent to 2,900.51. The Dow Jones Industrial Average slid 0.7 percent to 25,962.44. The Nasdaq composite dropped 0.7 percent to 7,948.56.
The US market has been volatile this month as investors try to parse conflicting signals on the US economy and determine whether a recession is on the horizon. A key concern is that the US-Chinese tariff war will weigh on global economic growth.
Trump delays Huawei ban
Some chipmakers rose on Monday's news that the Trump administration delayed enforcement of export curbs on US technology sales to Chinese telecom equipment maker Huawei Technologies Ltd.
Qualcomm added 1.6 percent.
Last week, many stock indexes around the world hit their lowest points of the year before rallying.
Analysts say the concerns that drove that sell-off could resurface at any time.
Energy and currency markets
Benchmark US crude gained 21 cents to $56.34 per barrel in electronic trading on the New York Mercantile Exchange. The contract shed 1 cent on Tuesday to close at $56.13. Brent crude, used to price international oils, rose 31 cents to $60.34 per barrel in London. The contract advanced 27 cents the previous session to $60.03.
The dollar gained to 106.47 yen from Tuesday's 106.22. The euro was lower at $1.1095.