HONG KONG - Unease over the slow progress of US debt talks further dampened sentiment in Asian markets Wednesday, though Japanese stocks got a boost from forecast-beating economic growth data.
Regional traders were provided a tepid lead from Wall Street, where disappointing retail sales data and weak earnings from Home Depot indicated softening consumer demand.
But analysts said the readings were unlikely to give the Federal Reserve room to pause its interest rate hikes yet.
All eyes are on Washington, where lawmakers remain deadlocked in negotiations to lift the country's borrowing limit to pay its debts and avert a market-rattling default.
In early Asian trade, Hong Kong, Shanghai, Sydney, Singapore and Wellington fell, though Seoul, Taipei, Manila and Jakarta edged up.
"The standoff has forced traders to keep one foot on the gas and one foot on the brake, causing markets to spin wheels this week," said SPI Asset Management's Stephen Innes.
Tokyo led gainers after figures showed Japan's economy grew more than expected in January-March thanks to a surge in tourism after pandemic border restrictions were lifted.
The figures helped push the Nikkei 225 even higher, and it has now piled on more than 15 percent since the turn of the year, while the Topix is at a three-decade high.
Analysts said the strong market performance has been helped by corporate reforms and the central bank's ultra-loose monetary policies.
Comments from several Fed officials did little to provide any clarity on its plans for rates at next month's policy meeting.
Richmond president Thomas Barkin said he was open-minded but still looking for signs that more than a year of tightening was having the necessary effect on inflation, which remains well above the bank's target.
"I do want to learn more about what's happening with all these lagged effects," he told Bloomberg Television.
"But I also want to reduce inflation. And if more increases are what's necessary to do that, I'm comfortable doing that."