Global shares drop after Wall Street sinks on rate worries

Global shares mostly declined Wednesday after Wall Street broke its record-breaking bull run with its worst day in weeks.

France's CAC 40 edged up 0.1% in early trading to 8,139.15, while Germany's DAX rose 0.3% to 18,331.04. Britain's FTSE 100 dropped 0.6% to 7,887.60. U.S. shares were set to drift lower with Dow futures down 0.1% to 39,475.00. S&P 500 futures fell 0.2% to 5,251.50.

Japan's benchmark Nikkei 225 slid 0.8% in morning trading to 39,511.88. Sydney's S&P/ASX 200 slipped 1.3% to 7,782.50. South Korea's Kospi dropped 1.4% to 2,714.18. Hong Kong's Hang Seng lost 1.1% to 16,753.82, while the Shanghai Composite fell 0.2% to 3,070.04.

Analysts said worries were growing that anxieties that rattled Wall Street might spread to Asia, despite recent relatively positive economic signs from China.

"Investors are grappling with the possibility that this turbulence could mark the beginning of a more significant correction in the markets," said Stephen Innes, managing partner at SPI Asset Management.

China has set an ambitious target of around 5% economic growth this year, seeking to move past recent troubles in the property sector and the lingering effects of pandemic-era disruptions.

A new report from Moody's Ratings said China's slowing economy will aggravate difficult business conditions for Japanese manufacturers in the next year to year and a half.

"China is an important market for Japanese manufacturers of factory automation and other industrial equipment, automotive parts, and elevator and escalator systems. A decline in Chinese demand would weigh on the companies' overall earnings and cash flow," it said.

Traders have already drastically reduced their expectations for how many times the Federal Reserve will cut interest rates this year, halving them from a forecast of six at the start of the year. That would be in line with the three cuts that Fed officials themselves have hinted at.

Because the U.S. economy has remained stronger than expected, investors say the chances are rising that the Fed may deliver just two rate cuts this year.

In energy trading, benchmark U.S. crude added 4 cents to $85.19 a barrel. Brent crude, the international standard, rose 7 cents to $89.01 a barrel.

In currency trading, the U.S. dollar rose to 151.71 Japanese yen from 151.54 yen. The euro cost $1.0775, up from $1.0776.