The retreat extended a subdued start to the week, with investors unimpressed by China’s efforts to boost its economy, including a fresh interest rate cut that was smaller than expected.

All three major US indices as well as the top European markets closed in the red on Tuesday, and Asian investors picked up the baton in a similar mood.

Hong Kong, Shanghai, Sydney, Wellington, and Seoul all dropped in morning trade. Tokyo also fell at the open but clawed back into positive territory.

All eyes are on Washington, where Fed Chair Powell will make a semiannual appearance before Congress.

His comments will be closely scrutinised for clues about the direction of the Fed’s campaign to fight soaring inflation with interest rate hikes.

“He will come on and try to remain hawkish,” ANZ Bank’s Mahjabeen Zaman told Bloomberg Television, saying there was still a risk of further hikes.

The US central bank last week held rates steady after 10 straight increases but signalled more hikes to bring prices under control.

The anxiety over Powell’s testimony built on top of disappointment on market floors this week with Beijing’s moves to try and revive the Chinese economy.

The People’s Bank of China reduced its benchmark five-year rate by 10 basis points on Tuesday, less than the 15 points expected, though it did meet forecasts for a 15-point reduction in the one-year rate.

“Developments in China, where the central bank cut its reference interest rate by ten basis points, continue to point to a slower-than-predicted post-pandemic recovery in the world’s second-largest economy,” said ActivTrades analyst Ricardo Evangelista.

“With China’s economy struggling to regain momentum, the headwinds for the global economy get stronger.”

CMC Markets analyst Michael Hewson said the consensus was that the PBoC’s “measure won’t make much difference” and that it is just “tinkering around the edges”.