HONG KONG (AP) -- Asian markets were mostly lower on Wednesday after shares slumped on Wall Street despite better-than-expected reports on the U.S. jobs market and business activity.

U.S. futures and oil prices were higher.

Japan's benchmark Nikkei 225 was flat at 40,079.09. The Japanese yen weakened against the dollar, which was trading at 158.19 yen, up from 158.06.

Hong Kong's Hang Seng lost 1.6% to 19,137.88 and the Shanghai Composite index dropped 1.5% to 3,182.49. Shares of Tencent fell 2.1%, and shares in CATL, the world's largest battery maker, dropped 1.4%. Both companies were included in a list released by the U.S. Defense Department linking them to China's military.

Meanwhile, more uncertainties loom for the world's second-largest economy as potential tariffs and policy shifts are expected when U.S. President-elect Donald Trump takes office on Jan. 20.

In South Korea, the Kospi jumped 1.2% to 2,522.75. Australia's S&P/ASX 200 advanced 0.7% to 8,348.60.

On Tuesday, the S&P 500 fell 1.1% to 5,909.03 after giving up an early gain. The Dow Jones Industrial Average dropped 0.4% to 42,528.36, while the Nasdaq composite tumbled 1.9% to 19,489.68.

Stocks dropped under the weight of rising yields in the bond market, which jumped immediately after the release of the encouraging reports on the economy. One said U.S. employers were advertising more job openings at the end of November than economists expected. The other said activity for finance, retail and other services businesses grew much faster in December than expected.

The strong reports are of course good news for workers looking for jobs and for anyone worried about a possible recession that earlier seemed inevitable to pessimists. But such a solid economy could also keep up pressure on inflation, and it could make the Federal Reserve less likely to deliver the cuts to interest rates that Wall Street loves.

The Fed began cutting its main interest rate in September to give the economy a boost, but it's hinted a slowdown in easing is coming. The threat of tariffs from President-elect Donald Trump has raised worries about possible upward pressure on inflation, which has stubbornly remained just above the Fed's 2% target.

Tuesday's report on U.S. services industries from the Institute for Supply Management also contained discouraging trends on inflation, saying price increases accelerated in December.

Expectations for fewer cuts to interest rates in 2025 have already been building for weeks. That sent longer-term Treasury yields upward. So have worries about other possible Trump policies, such as tax cuts, which could swell the U.S. government's debt and likewise push yields higher.

Those higher yields make Treasury bonds more attractive to investors who might otherwise buy stocks, which in turn puts downward pressure on stock prices, and the super-safe bonds are paying notably more. The yield on a 10-year Treasury climbed to 4.69% from 4.63% shortly before the release of Tuesday's reports and from just 4.15% in early December.

Now that worries from the summer about a potentially slowing U.S. economy have abated and the 10-year Treasury yield is firmly above 4.50%, "we believe the market is shifting into a 'good news is bad news' environment again," according to Bank of America strategists led by Ohsung Kwon.

That raises the stakes for Friday's coming update on the U.S. job market, which economists expect will show a slowdown in overall hiring. They're looking for growth of 156,500 jobs in December, according to FactSet.

In energy trading, benchmark U.S. crude added 37 cents to $74.62 a barrel. Brent crude, the international standard, rose 29 cents to $77.34 a barrel.

In currency trading, the euro cost $1.0347, up from $1.0341.

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AP Business Writer Stan Choe contributed.