Asian markets fall on US rate concerns, oil rises after attack

HONG KONG, China — Equities fell Wednesday on lingering worries about the outlook for US interest rates, while oil prices extended their gains after an attack on a ship in the Red Sea stoked fresh worries about supplies from the Middle East.

With crucial inflation data out of the United States due at the end of the week, investors are largely playing a waiting game, with many inclined to sell after a recent run-up.

However, a forecast-beating read on consumer confidence in the world's top economy dented hopes that the Federal Reserve will have room to cut borrowing costs this year, while the mood was also soured by a weak Treasury sale that saw yields push higher.

Meanwhile, US central bank official Neel Kashkari warned that decision-makers had not ruled out a possible hike if they continue to struggle to bring prices down to their two percent target.

Wall Street's three main indexes ended mixed on their first day after a long weekend, with sentiment clouded by the government bond sale and the Conference Board gauge of May consumer confidence.

"The reading is still weak, being much closer to the bottom than the top of its past 10 years range. Nevertheless, this data point is the second successive upside surprises in the releases," said Ray Attrill of National Australia Bank.

Minneapolis Fed chief Kashkari said Tuesday that while monetary policy remained tight -- rates are at two-decade highs -- "I don't think anybody has totally taken rate increases off the table".

"I think the odds of us raising rates are quite low, but I don't want to take anything off the table."

His comments come after several other Fed officials said they were cautious about cutting too soon and wanted to see more data proving inflation was coming back down to two percent.

"I can tell you this, it certainly won't be more than two cuts," he warned.

Investors are now pricing in one cut before the year's end -- compared with as many as six tipped in January.

Chris Low, of FHN Financial, said policymakers were "looking for multiple good inflation reports, and by good, people like governor Christopher Waller imply they should be mostly better even than April, let alone any of the months of the