Regional markets took a weak lead-in from Wall Street, with U.S. stock benchmarks dropping for a second successive session on Wednesday as sentiment towards equities remained on edge

Most Asian stocks dropped on Thursday, extending declines after a weak start to the year on doubts over the timing of U.S. interest rate cuts, while Chinese markets were impacted by Fitch downgrading four major state-owned asset managers.

Regional markets took a weak lead-in from Wall Street, with U.S. stock benchmarks dropping for a second successive session on Wednesday as sentiment towards equities remained on edge. U.S. stocks also saw high levels of profit-taking after a decline through December.

China’s bluechip Shanghai Shenzhen CSI 300 index was the worst performer in Asia on Thursday, shedding 1.4% and hovering above a five-year low, while the Shanghai Composite index shed 0.9%.

Fitch downgraded the ratings of four Chinese state-owned asset managers, and put three of the four firms on watch for more potential downgrades.

The ratings agency cited growing pressure on the four from an ongoing slump in the property market, as well as increased uncertainty over the government’s ability to support the finances of the asset managers. This in turn presented uncertainty over the ability of the firms to snap-up non-performing assets from the open market, which bodes poorly for China’s financial markets.

A positive private survey on the services sector did little to inspire confidence in the country, with the Caixin Services PMI showing that China’s service sector grew more than expected in December.

Among other Asian markets, Japan’s Nikkei 225 index declined 0.8%.

Losses in heavyweight technology stocks also weighed on the Nikkei, reflecting a trend seen across most stock markets.

Technology-heavy indexes continued to bear heavy losses as markets speculated just when the Fed could begin reducing interest rates this year. South Korea’s KOSPI dropped 0.9%, while Hong Kong’s Hang Seng index lost 0.4%.

The minutes of the Fed’s December meeting showed central bank officials acknowledging progress against inflation over the past year. But the minutes also offered few hints on when the bank could potentially begin reducing interest rates as hinted during the meeting.

While the Fed is still expected to cut rates by at least 75 bps in 2024, markets remained uncertain over the timing of the potential cuts. This sparked high profit-taking in tech stocks, which had increased sharply through December on the prospect of rate cuts this year.

Markets were also cautious before nonfarm payrolls data due this Friday, which is expected to factor in monetary policy.

Wider Asian stocks extended recent losses, with Australia’s ASX 200 dropping 0.3% and coming further off a recent 2-1/2-year high. PMI data showed Australia’s services sector remained in contraction through December.