Asian markets drifted Wednesday as traders tracked a tepid lead from Wall Street following meeting minutes showing Federal Reserve officials were inclined to keep interest rates elevated for "some time" in order to slay inflation.
Traders took the opportunity to take stock after a recent rally that has been fuelled by a growing optimism that the central bank's next move will likely be a cut in the new year.
The upbeat mood has lifted equities and seen US Treasury yields retreat from 17-year highs, which has in turn pushed the dollar down against other currencies.
The minutes from the Fed's October-November policy meeting showed decision-makers recognised the impact that more than a year of rate hikes has had on inflation -- which has dropped from the four-decade high seen last year -- but were mindful to make sure they got the job done.
"All participants judged that it would be appropriate for policy to remain at a restrictive stance for some time until inflation is clearly moving down sustainably" towards its two percent target, said the minutes published on Tuesday.
The remarks -- which echo warnings from several policymakers, including Fed boss Jerome Powell -- tempered some of the hope that the bank would slash rates in the new year, with some commentators having pencilled in such a move in March.
However, it did little to fan fears of more hikes on the way, with any increase in Treasury yields seen as doing enough to tighten financial conditions.
"If we were to see stronger economic and inflation data before the December meeting, longer-term rates are likely to rebound and substitute for a rate hike. Therefore we do not expect further hikes," said Philip Marey at Rabobank.
There is a belief among many traders that the Fed has managed to guide the world's number one economy to a soft landing by tempering growth without causing a recession.
All three main indexes on Wall Street ended in the red Tuesday, with traders now winding down ahead of the Thanksgiving holiday.
Still, US markets have enjoyed a healthy run-up of late: the S&P 500 has risen around 10 percent in the past month, while the Nasdaq has piled on more than 12 percent.
Asia fluctuated on Wednesday, with Hong Kong shifting in and out of positive territory, while Shanghai, Sydney, Seoul, Wellington, Taipei and Jakarta slipped.
Tokyo and Manila edged up. Singapore was also slightly higher as data showed the city-state's economy expanded more than expected in the third quarter.
The dollar remained under pressure as investors came to terms with the idea that rates will not rise any further, while the yen was also getting support against the greenback from bets on the Bank of Japan shifting from its own ultra-loose policy.
Key figures around 0230 GMT
Tokyo - Nikkei 225: UP 0.6 percent at 33,560.01 (break)
Hong Kong - Hang Seng Index: DOWN 0.1 percent at 17,709.24
Shanghai - Composite: DOWN 0.2 percent at 3,062.85
Dollar/yen: DOWN at 148.31 yen from 148.33 yen on Tuesday
Euro/dollar: UP at $1.0915 from $1.0913
Pound/dollar: DOWN at $1.2535 from $1.2537
Euro/pound: UP at 87.05 pence from 87.02 pence
West Texas Intermediate: DOWN 0.1 percent at $77.67 per barrel
Brent North Sea crude: DOWN 0.2 percent at $82.33 per barrel
New York - DOW: DOWN 0.2 percent at 35,088.29 (close)
London - FTSE 100: DOWN 0.2 percent at 7,481.99 (close)
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