European and Asian stock markets diverged on Wednesday, the eve of key US inflation data and the latest earnings season.
Global equities have largely weakened since the start of the year as investors grow concerned that they may have been too hasty at the end of 2023 in pricing in a series of US interest-rate cuts for this year.
The Federal Reserve said at its December meeting that it saw three reductions in 2024, while analysts had forecast double the amount.
However, the release last week of minutes from that meeting, and a forecast-beating US jobs report forced dealers to scale back rate-cut expectations, even as inflation comes down.
Traders had ended last year optimistic that the Fed would start to cut rates in March but analysts are now predicting June.
Analysts said US consumer price index data on Thursday will be crucial to how markets perform in the near term.
Meanwhile, the release shortly of annual earnings from some of the biggest companies will show the impact that several rate rises have had on performance.
"Attention gradually shifts to the upcoming earnings season to gain insights into companies' growth trajectories," noted Stephen Innes of SPI Asset Management.
In the US, "mega-cap technology firms... are under close scrutiny due to their significant influence and substantial weight in the S&P 500", he said.
Wall Street's S&P 500 and Dow stock indices ended lower on Tuesday, though the Nasdaq eked out a small gain, with sentiment also dampened by the World Bank decision to cut its 2024 global growth outlook, due in part to weaker activity in the United States and China.
Much of Asia performed no better, having enjoyed a much-needed bounce on Tuesday.
Tokyo, however, extended gains on Wednesday to hit a fresh 34-year high, boosted by a slowdown in wage growth. That, along with the Fed rate outlook, weighed on the yen.
"With the market's expectation of an early Fed rate cut receding after the start of the new year, Japanese stocks remained firm on the back of expectations that the yen's depreciation against the dollar will support corporate earnings," said JPMorgan's Rie Nishihara.
London was down nearing the half-way stage, while Paris and Frankfurt steadied.
Elsewhere, bitcoin was lower after volatile trading on Tuesday when an unauthorised message posted to the US Securities and Exchange Commission's official X account said it approved wider trading of the world's biggest cryptocurrency.
The message sent bitcoin to a 22-month high near $48,000 but sank after SEC chair Gary Gensler took to his own X account to warn that the market account had been "compromised" and that an "unauthorised tweet" had been posted.
It was sitting around $45,000 on Wednesday.
Traders have been speculating for weeks that the SEC would give the green light to exchange traded funds of bitcoin, which for the first time would replicate the token's performance without a need to hold the unit directly.
London - FTSE 100: DOWN 0.3 percent at 7,663.11 points
Paris - CAC 40: FLAT at 7,425.69
Frankfurt - DAX: UP 0.1 percent at 16,702.91
EURO STOXX 50: UP 0.1 percent at 4,469.85
Tokyo - Nikkei 225: UP 2.0 percent at 34,441.72 (close)
Hong Kong - Hang Seng Index: DOWN 0.5 percent at 16,097.28 (close)
Shanghai - Composite: DOWN 0.5 percent at 2,877.70 (close)
New York - Dow: DOWN 0.4 percent at 37,525.16 (close)
Dollar/yen: UP at 144.96 yen from 144.48 yen on Tuesday
Euro/dollar: UP at $1.0954 from $1.0934
Pound/dollar: UP at $1.2730 from $1.2710
West Texas Intermediate: FLAT at $72.21 per barrel
Brent North Sea Crude: FLAT at $77.57 per barrel
