Asian stocks were poised to decline Wednesday as negotiations over raising the US debt ceiling remained at an impasse, sapping sentiment for risk taking.

Futures for equity benchmarks in Hong Kong, Japan and Australia were all down at least 0.5%, following drops of more than 1% for the S&P 500 and Nasdaq 100. Oil extended gains to a third day after the Saudi energy minister warned short-sellers of pain ahead.

Major currencies were little changed in early Asian trading, with the New Zealand dollar in focus ahead of a central bank decision that’s expected to bring a 12th-straight interest rate hike. The currency dropped 0.6% Tuesday amid heightened volatility, and as a gauge of greenback strength touched a two-month high.

New Zealand’s policy-sensitive two-year government bond yield rose three basis points to 5.13%, versus the Reserve Bank’s official cash rate of 5.25%. Yields on two-year Treasuries were steady at 4.32% on Tuesday while the benchmark 10-year rate fell two basis points to 3.69%.

In the US, debt negotiations continued but progress appeared limited, with some House Republicans questioning the urgency of a deadline imposed by Treasury Secretary Janet Yellen for when the government will start missing debt payments.

Investors have been demanding higher premiums to hold US debt, especially those at the highest risk of default, with little time left for politicians to find an agreement. Yields on securities maturing June 6 topped 6% Tuesday compared to bills maturing May 30 that are yielding about 2%.

“The fact that some of these politicians are contemplating default publicly is a bad sign,” said Mike Zigmont, head of trading and research at Harvest Volatility Management.

Invesco Chief Global Market Strategist Kristina Hooper said she sees a brief technical default as a real possibility, which is more likely to be reflected in bond prices, rather than stocks.

The S&P 500’s drop was led by industrials and communication stocks. Lowe’s Cos. cut its sales outlook, citing a slowdown in consumer spending. Broadcom Inc. signed a multibillion-dollar deal with Apple Inc. to develop 5G radio frequency components. And a rout in luxury-good makers including Hermes International wiped out more than $30 billion in value.

In economic news, US new-home sales unexpectedly rose to a more than one-year high, and US business activity grew in May by the most in over a year.

Minutes expected later Wednesday from the last Federal Open Market Committee meeting will offer traders the latest insights into whether interest rates will be paused at the Fed’s next meeting in June.

“While a pause might not strictly translate to terminal, it goes without saying that the bar to restart hikes will be very high in the current environment,” BMO strategist Ian Lyngen wrote in a note.

Key events this week:

• Fed issues minutes of May 2-3 policy meeting, Wednesday
• Bank of England Governor Andrew Bailey speaks, Wednesday
• US initial jobless claims, GDP, Thursday
• Interest rate decisions in Turkey, South Africa, Indonesia, South Korea, Thursday
• Tokyo CPI, Friday
• US consumer income, wholesale inventories, durable goods, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 7:49 a.m. Tokyo time. The S&P 500 fell 1.1% Tuesday
• Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 1.3%
• Nikkei 225 futures fell 0.6%
• Australia’s S&P/ASX 200 Index futures fell 0.5%
• Hang Seng Index futures fell 0.8%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0773
• The Japanese yen was little changed at 138.53 per dollar
• The offshore yuan was little changed at 7.0631 per dollar
• The Australian dollar was little changed at $0.6613

Cryptocurrencies

• Bitcoin fell 0.1% to $27,194.49
• Ether fell 0.2% to $1,851.86

Bonds

• The yield on 10-year Treasuries declined two basis points to 3.69% Tuesday
• Australia’s 10-year yield was little changed at 3.66%

Commodities

• West Texas Intermediate crude rose 1.4% to $73.92 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Emily Graffeo and Cristin Flanagan.