Asian shares retreated Tuesday in quiet trading as investors awaited signs of what might be ahead for U.S. interest rates.

Japan’s benchmark Nikkei 225

NIK, +0.14%

 was flat at 21,526.22, while Australia’s S&P/ASX 200

XJO, -0.10%

 dipped 0.3%. South Korea’s Kospi

180721, -0.59%

 was marginally lower, down 0.2%. Hong Kong’s Hang Seng

HSI, -0.75%

 fell 0.8%, while the Shanghai Composite

SHCOMP, -0.18%

 lost 0.6%.

Shares fell on Wall Street Monday amid growing speculation an unexpectedly strong pickup in U.S. employment growth last month lead the Federal Reserve to hold back on aggressively cutting its benchmark interest rate. Many investors still expect a cut of a quarter percentage point, but fewer are now expecting a half-point reduction.

The market rallied through much of June after the Federal Reserve signaled that it’s prepared to cut interest rates to offset slowing global growth and the fallout from U.S. trade conflicts.

The S&P 500

SPX, -0.48%

 fell 0.5% to 2,975.95. The Dow Jones Industrial Average

DJIA, -0.43%

 slid 0.4% to 26,806.14. The Nasdaq Composite

COMP, -0.78%

 lost 0.8% to 8,098.38. The Russell 2000 index

RUT, -0.90%

 of smaller company stocks dropped 0.9% to 1,561.39.

Investors will be listening closely for any hints on the central bank’s interest rate policy on Wednesday and Thursday, when Powell delivers the Fed’s semi-annual monetary report to Congress.

Read: Could the Fed surprise the stock market by skipping a July rate cut? It’s not out of the question

“After getting accustomed to trading the bad news is good news regime, investors are still struggling with the good news is the bad direction,” Stephen Innes, managing partner at Vanguard Markets in Singapore said in a commentary.

“They shouldn’t be as on the macro level; there is still no sign of a turnaround for eurozone activity data or China for that matter,” Innes said. “Suggesting downside global growth momentum remains the path of least resistance and if this doesn’t trigger a deluge of central bank easing, not sure what will.”

Benchmark crude oil

CLQ19, -0.33%

  dipped 15 cents to $57.51 a barrel. It rose 15 cents to $57.66 a barrel Monday. Brent crude oil

BRNU19, -0.11%

the international standard, fell 16 cents to $63.95 a barrel.

The dollar

USDJPY, +0.09%

 rose to 108.86 Japanese yen from 108.40 yen Monday. The

EURUSD, -0.0624%

 weakened to $1.1213 from $1.1230.

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2019-07-09