HONG KONG - Unease over the slow progress of US debt talks further dampened sentiment in equity markets on 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.
Still, investors remain nervous about the possibility of a default, which many economists warn will send shivers through the world economy.
Hong Kong, Shanghai, Sydney, Singapore, Mumbai and Bangkok fell on Wednesday, though Seoul, Taipei, Manila, Wellington and Jakarta edged up.
London, Paris and Frankfurt fell at the open.
"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 to a 20-month high 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.