Asian shares slip in cautious trading, shrug off US rally

TOKYO (AP) — Asian shares slipped in cautious trading Wednesday, shrugging off a rally on Wall Street led by technology companies and banks that erased most of the losses from the previous day's sell-off.

Japan's benchmark Nikkei 225 sank 1.3% in afternoon trading to 27,470.09. South Korea's Kospi dipped 1.4% to 2,919.87. Australia's S&P/ASX 200 shed 0.6% to 7,206.50. Hong Kong's Hang Seng was little changed inching down less than 0.1% to 24,093.07. Trading was closed in Shanghai for the Chinese national holidays.

Worries remain in Asia about ongoing coronavirus infections, although hopes are growing that economic activity will return closer to normal later this year, bouncing back from the deep downturn in 2020.

“On the risks front, China credit problems and contagion risks have certainty not abated with developer concerns still surfacing. As such, caution has not been thrown to the winds,” said Tan Boon Heng of the Asia & Oceania Treasury Department at Mizuho Bank in Singapore.

Troubled real estate developer China Evergrande Group's risk of defaulting on its more than $300 billion in debt has alarmed investors already worried over the slowdown in China's growth.

Shares skidded in Japan after Prime Minister Fumio Kishida took office on Monday. Kishida has indicated he might favor a capital gains tax to improve government finances.

Prospects for the world's third largest economy remain uncertain. Fitch agency has retained a “negative outlook” for Japan, citing “downside risks to the macroeconomic and fiscal outlook from the coronavirus shock.”

Shares fell in New Zealand after its central bank raised interest rates for the first time in more than seven years, removing some of the support it put in place when the coronavirus pandemic began.

The Reserve Bank...