Asian shares fall after retreat on Wall Street

TOKYO (AP) — Asian shares fell in cautious trading on Wednesday. with Tokyo's Nikkei 225 down nearly 3%, after stocks on Wall Street sank to a new low for the year.

Shares also sank in Hong Kong, Shanghai, Seoul and Sydney.

Technology shares led the decline Tuesday on Wall Street. Increasing coronavirus infections in Asia, linked to the spread of omicron, are alarming policy makers. Asian economies have suffered during the pandemic and are struggling to get recoveries going again.

“The risk-off mood in global markets is being carried into Asia’s session today, as market expectations continue to price for a more aggressive Fed tightening ahead, with concerns that economic momentum may be capped,” said Yeap Jun Rong, market strategist at IG in Singapore.

Japan’s benchmark Nikkei 225 dropped 2.9% to 27,439.95, its lowest level since August, on heavy selling of big manufacturers like Toyota Motor Corp., which lost 5%, and Sony Corp., which plunged 12.8%, in line with other tech shares.

Australia’s S&P/ASX 200 fell 1.0% to 7,332.50. South Korea’s Kospi dropped 0.8% to 2,842.28. Hong Kong’s Hang Seng fell 0.2% to 24,064.48, while the Shanghai Composite lost 0.3% to 3,559.00.

On Wall Street, the major indexes’ losses have mounted this month as rising inflation and the pandemic’s latest surge cause investors to take caution.

Heightened expectations of a rate hike by the Federal Reserve have kept Treasury yields rising. The 10-year Treasury was steady at 1.87% on Wednesday, the highest since January 2020. It was at 1.77% late Friday.

Investors are now pricing in a better than 86% probability that the Fed will raise short-term rates at its meeting of policymakers in March. A month ago, they saw less than a 47% chance of that, according to CME Group.

The S&P 500 fell...