Stock market today: Asian markets track Wall Street decline

Asian shares declined Wednesday, tracking losses on Wall Street ahead of a decision on interest rates by the Federal Reserve.

U.S. futures edged higher while oil prices were little changed.

The Federal Reserve will wrap up a two-day policy meeting later in the day. It is widely expected to raise its key rate by a quarter percentage point to 5%-5.25% to try to finally tamp down inflation.

Meanwhile, a political stalemate has left the U.S. edging ever closer to what would be a catastrophic default on government debt. President Joe Biden invited the top four congressional leaders to face-to-face talks at the White House next week to try to resolve the problem.

“Risk sentiments are back to a cautious mood this week, having digested many of the big tech earnings and a series of uncertainties are now back onto the radar for the bulls to tackle,” Yeap Jun Rong of IG Research said in a commentary.

Markets in Japan and China were closed Wednesday for holidays. In Hong Kong, the Hang Seng index lost 1.6% to 19,608.54. South Korea's Kospi shed 0.9% to 2,500.50 and the S&P/ASX 200 in Sydney declined 1.1% to 7,184.90.

India's Sensex lost 0.4% and shares also fell in Taiwan and Southeast Asia.

On Tuesday, the S&P 500 fell 1.2% to 4,119.58 and the Dow dropped 1.1% to 33,684.53. The Nasdaq composite gave up 1.1% to 12,080.51.

Some of the sharpest drops came from smaller- and mid-sized banks, which have been under heavy scrutiny as the banking system cracks under the weight of much higher interest rates.

PacWest Bancorp dropped 27.8%, Western Alliance Bancorp fell 15.4% and Comerica sank 12.4%.

Three of the four largest U.S. bank failures in history have come since March, and investors are hunting for the next likely to topple or suffer a debilitating exodus of customers.

Regulators seized First Republic Bank at the start of this week and sold most of it to JPMorgan Chase, which had raised hopes that the turmoil could ease.

Adding to worries, a report showed U.S. employers advertised the fewest job openings in nearly two years during March. The job market has been one of the main pillars supporting a slowing economy, and a drop-off there would likely mean a recession.

High rates have already hit the housing market sharply and hurt the banking system. Many investors are preparing for a recession to hit later this year.

Adding to the gloom, Treasury Secretary Janet Yellen said late Monday that the U.S. government could default on its debt as early as June 1 unless a divided Congress allows it to borrow more. That’s an earlier “X-date” than previously thought.

Much of the financial system is built on the assumption that U.S. government debt is the safest investment available. The hope is that Congress will strike a deal before the deadline, as it has many times before, because the alternative would be so dire.

With only weeks to go before June 1, Congress could be forced to agree to an extension of just a few months, rather than a long-term deal.

“There could be a few debt ceiling deadlines prior to the 2024 elections,” UBS strategists led by Michael Cloherty wrote in a report.

In the bond market, the yield on the 10-year Treasury slumped to 3.42% from 3.57% late Monday. But early Wednesday it was at 3.54%.

In other trading Wednesday, U.S. benchmark crude oil lost 3 cents to $71.63 per barrel in electronic trading on the New York Mercantile Exchange. It tumbled $4 on Tuesday.

Brent crude, the basis for pricing international oils, gained 3 cents to $75.35 per barrel.

The dollar fell to 136.07 Japanese yen from 136.54 yen late Tuesday. The euro rose to $1.1019 from $1.1003.