Asian shares drifted lower on Thursday, tracking a sell off in the U.S. equities after comments from the Federal Reserve Chairman Jerome Powell rekindled investor fears of faster interest rate hikes.
Powell, in his first semi-annual testimony to Congress on Tuesday, said he expects the next two years to be strong for the economy and that his personal outlook for growth has firmed since December.
His comments come just days after Fed officials agreed that "the strengthening in the near-term economic outlook increased the likelihood that a gradual upward trajectory of the federal funds rate would be appropriate."
Three rate rises are now almost fully priced in for this year, compared to two as recently as December.
MSCI's broadest index of Asia-Pacific shares outside Japan down 0.35 percent, on track for a third straight day of losses.
On Wall Street, the Dow and the S&P 500 gained overnight after the downward revision of U.S. economic growth in the fourth quarter weakened chances of faster rate hikes.
Back home, SGX Nifty, an early indicator of the Nifty 50's trend in India, signals a weak start for the domestic markets after the benchmark Sensex declined 162 points or 0.47 percent to close at 34,184 on Wednesday.
The partially convertible rupee closed at 65.18 on Wednesday, down 0.44 percent from its previous close of 64.80.
So far this year, the rupee weakened 1.5 percent, while foreign investors have bought $507 million and $1.4 billion in equity and debt markets, respectively.
Indian financial, currency and debt markets will be shut on Friday for a public holiday.
GDP data: India's gross domestic product expanded at the fastest pace in five quarters at 7.2 percent in the December quarter, powered by growth in the services sector and a rebound in agriculture and manufacturing.
Powell's testimony: Powell's comments spooked the markets as investors bet that rates would rise more quickly.
"My personal outlook for the economy has strengthened since December," he said. "I wouldn't want to prejudge that new set of projections, but we'll be taking into account everything that has happened since December."
Crude check: Brent crude declined 0.17 percent at $64.62 per barrel while the West Texas Intermediate crude was unchanged at $61.64 a barrel.
