SYDNEY - Asian shares extended a global sell-off on Wednesday while the dollar held gains as market optimism about early and aggressive US interest rate cuts ebbed ahead of the release of Fed minutes and jobs data.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1 percent after a 1.0 percent drop the previous day in a sluggish start of the new year. Japan markets remain shut for a holiday.

South Korean shares slid 1.8 percent and Australia's resources heavy stocks declined 1.1 percent.

"Risk assets struggled a tad yesterday, and that makes a degree of sense given the complicated back story, and the remarkable rally seen into year end," said Padhraic Garvey, regional head of research, Americas, at ING.

"While a one-day move cannot be simply extrapolated, there are reasons to be a tad concerned on the risk front at this early phase of 2024. Geo-political concerns have not abated, and in fact if anything are elevating."

Denmark's Maersk and German rival Hapag-Lloyd said on Tuesday their container ships would continue to avoid the Red Sea route.

Overnight, Wall Street's euphoria about rate cuts prospects cooled a little as stocks retreated from record highs. The Nasdaq slid 1.6 percent and the S&P 500 lost 0.6 percent.

Apple fell nearly 3 percent to a seven-week low after Barclays downgraded its shares on demand concerns. Tesla shares ended flat after delivering a record number of electric vehicles in the fourth quarter.

Stocks were also pressured by a climb in Treasury yields in the new year. The 10-year US Treasury yield briefly popped above 4 percent overnight, the first time in two weeks, but closed at 3.9406 percent, up 8 basis points for the day.

Cash Treasuries were not traded in Asia due to the holiday in Japan. 10-year Treasury futures were mostly flat on Wednesday.

In the foreign exchange market, currencies mostly traded sideways in early Asia hours. The US dollar, which climbed 0.8 percent against its peers overnight to a two-week high, hovered at 102.15.

The euro was last at $1.0940, having fallen 0.9 percent overnight, while the Japanese yen nursed losses at 142.12 per dollar after a 0.8 percent decline.

Bitcoin rose 0.5 percent to $45,205, not far from a 21-month top of $45,922 hit on Tuesday.

Oil prices were marginally higher after closing lower on Tuesday. US crude futures drifted 0.1 percent higher to $70.43 a barrel, after dropping more than 1 percent on Tuesday, while Brent was flat at $75.86 a barrel.

Market focus is now on the Fed minutes for the December policy meeting due later in the day and a slew of data this week which could help justify its optimism of the aggressive policy easing that has been priced in. Futures have wagered on six rate cuts in 2024.

The ISM survey on US manufacturing is also due later on Wednesday, as well as job openings data, before a private payrolls report and jobless claims results on Thursday. The closely watched US nonfarm payrolls report is due on Friday.

Spot gold was 0.1 percent higher at $2,060.18 an ounce.