SYDNEY (Reuters) – Asian shares pulled back from a three-week high on Wednesday, dragged lower by Chinese stocks, though investors were still focused on upcoming company earnings for more signs of a global economic recovery.

Eurostoxx 50 futures were off 0.1%, those for Germany’s Dax were barely changed while London’s FTSE futures were up 0.4%. E-Mini futures for the S&P 500 were mostly flat.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside of Japan had started on a firm footing, going as high as 697.01 points, a level last seen on March 18.

However, it succumbed to selling pressure and was last down 0.1% after Chinese and Hong Kong shares opened in the red following a strong rally last week.

China’s bluechip CSI300 index was down about 1% while Hong Kong’s Hang Seng index fell 0.8%.

Geopolitical tensions in the region added to the jitters.

Taiwan’s foreign minister said on Wednesday it will fight to the end if China attacks, adding that the United States saw a danger that this could happen amid mounting Chinese military pressure, including aircraft carrier drills, near the island.

Other Asian markets were still positive.

Japan’s Nikkei was a shade higher while Australian shares rose 0.6% and South Korea’s KOSPI added 0.3%. New Zealand ended 0.7% higher.

Broadly, successful vaccine rollouts in the United States and UK together with sturdy macro-economic data have boosted investors’ risk appetite, aiding shares and emerging market assets.

“The U.S. economy is experiencing the first effects of a powerful double-dose vaccine of broad inoculation and fiscal stimulus,” said David Kelly, chief global market strategist at J.P. Morgan Asset Management.

“The reality is that forecasts remain very uncertain…(but) early signs show the recovery is accelerating, suggesting a faster return to ‘normal’ than many had dared to hope a few months ago,” Kelly added.

Overnight, the three major Wall Street indexes closed lower, a day after the S&P 500 and the Dow rose to record levels driven by a stronger-than-expected jobs report last Friday and data showing a dramatic rebound in the U.S. services industry on Monday. [.N]

Investors also weighed the latest U.S. job openings report, which showed that vacancies rose to a two-year high in February while hiring had its biggest gain in nine months amid increased COVID-19 vaccinations and additional government stimulus.

Moreover, the International Monetary Fund raised its global growth forecast to 6% this year from 5.5%, reflecting a rapidly brightening outlook for the U.S. economy.

The upcoming earnings season is expected to show S&P profit growth of 24.2% from a year earlier, according to Refinitiv data, and investors will be watching to see whether corporate results further confirm recent positive economic data.

Elsewhere, all eyes will be on minutes of the U.S. Federal Reserve’s policy meeting with a rally in U.S. Treasuries extending into Wednesday. Ten-year yields US10YT=RR were down at 1.6455% from as high as 1.776% on March 30.

The five-year U.S. Treasury yields dropped sharply to 0.874%, weighing on the U.S. dollar. [FRX/]

The five-year Treasury yield is seen as a major barometer of how much faith investors have in the Federal Reserve’s pledge that it does not expect to raise interest rates until 2024.

The dollar rebounded from a two-week low of 92.246 against a basket of world currencies.

The euro was flat at $1.1874, sterling was slightly weaker at $1.3788, while the Japanese yen was a touch lower at 109.77.

In commodities, Brent crude futures was flat at $63.74 a barrel while U.S. crude was up 2 cents at $59.35.

Spot gold was off a touch at $1,741.4 an ounce.

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