MSCI Inc’s regional benchmark was set to end a six-day rally as it slipped about 0.4%, with almost all sectors traded in the red on Wednesday. Contracts for US equities pared earlier gains after the S&P 500 dropped 0.6% on Tuesday. Chinese markets are closed for a holiday.

The greenback weakened against most G10 currencies, with the New Zealand and Australian dollars leading the gains. New Zealand’s currency jumped to the highest level since mid-February following the unexpected 50-basis-point rate hike and two-year bond yields surged about 15 basis points.

The Aussie extended its modest advance and the policy-sensitive three-year government bond’s yield held a drop after the governor of the Reserve Bank of Australia said rates may still rise. The RBA paused its tightening cycle on Tuesday.

Meanwhile, the two-year Treasury yield rose slightly after declining as much as 14 basis points in the US session as data showed a drop in job openings. That bolstered bets the Federal Reserve will soon wrap up its tightening campaign. Treasuries underwent one of the most turbulent quarters in years in the period through March as traders debated the outlook for inflation amid fears of contagion from the banking sector’s turmoil.

Swap contracts downgraded the odds of a quarter-point rate hike at the Fed’s May meeting easing to around 50% from closer to 60%.

“The bond market may indeed be right that the Fed not just pauses, but pivots to rate cuts, but the circumstances that would drive that would not be great, certainly not for the equity market,” Liz Ann Sonders, chief investment strategist at Charles Schwab & Co, said on Bloomberg Television. 

Banks came under renewed pressure on Tuesday, with a gauge of financial heavyweights in the US falling the most in almost two weeks. In a wide-ranging annual letter to shareholders, JPMorgan Chase & Co’s chief Jamie Dimon warned the US banking crisis that sent markets careening last month will be felt for years.

“I think Jamie is correct in the sense that this may not be the last shoe to drop,” Amy Kong, chief investment officer at Barrett Asset Management, said on Bloomberg Television. “There will be broader ramifications to stock market prices as well as earnings.”

Vacancies at US employers sank in February to the lowest since May 2021, the Labor Department’s Job Openings and Labor Turnover Survey showed Tuesday. The reading was below all estimates in a Bloomberg survey. 

Elsewhere, oil extended its rally with West Texas Intermediate rising past $81 a barrel. Gold was steady and Bitcoin trended above the high end of its recent range of around $28,000. BM/DM