Most Asian markets experienced a decline on Thursday, aligning with another setback on Wall Street, influenced by the release of minutes from the US Federal Reserve's December meeting, which tempered expectations of an early interest rate cut.

The initial global rally that characterized the last months of 2023 has waned as concerns grew that the buying momentum may have outpaced itself, prompting traders to take a cautious approach at the beginning of the new year. Oil prices extended their previous day's surge, fueled by deadly blasts in Iran labeled as a "terrorist attack," intensifying geopolitical tensions in the already volatile Middle East.

The Fed's minutes revealed officials' intent to maintain elevated interest rates to ensure control over inflation, dealing a blow to market confidence. Investors, previously anticipating a rate cut as early as March following the bank's post-meeting statement last month, reevaluated their expectations.

The minutes indicated that policymakers viewed the policy rate as likely at or near its peak for the current tightening cycle. Despite expressing a desire to commence cuts in the current year, they did not provide a specific timeline. Wednesday's data indicated that while policymakers' measures were taking effect, they were not sufficient to push the economy into a recession. Job openings declined in December, and the manufacturing sector remained in contraction.

Attention has now shifted to the forthcoming release of crucial non-farm payroll data scheduled for Friday. Analysts suggest that although the labor market remains robust, a balance is emerging between demand and supply, signaling a cooling demand. Rubeela Farooqi at High-Frequency Economics noted that these data would be favorable for policymakers, aligning with the Fed's perspective that the next rate move will likely be lower, potentially in the second quarter.