Emerging Asian shares slid on Wednesday as concerns over the latest COVID-19 wave in Europe and potential US tax hikes sapped risk appetite, while most regional currencies weakened as the dollar neared four-month highs.
Benchmark indexes in Indonesia and Taiwan fell nearly 1% each, while South Korean equities declined for a fourth straight day.
Germany extended its lockdown and Norway postponed its reopening plan on Tuesday, while rising cases remained a concern for countries like India and the Philippines.
"This brings back concerns of growth momentum being derailed as some bigger countries may need to delay the reopening of their economies, travel borders," Maybank analysts wrote in a research note.
Impediments on the roll-out of vaccines remained, further dampening the mood.
Hong Kong temporarily suspended COVID-19 vaccinations using two batches of the treatment developed by Pfizer and BioNTech citing defective packaging, while a US health agency said AstraZeneca Plc may have included outdated information in the results of its US trial data.
Wall Street ended lower overnight as US Treasury Secretary Janet Yellen said the US economy remains in crisis from the pandemic even as she defended developing plans for future tax increases to pay for new public investments.
Riskier regional currencies mostly weakened as the safe-haven US dollar gained, with analysts pointing to a "risk-off" sentiment in the market.
The Indonesian rupiah and South Korean won declined the most, falling 0.4% each.
Thai shares shed 0.1%, but outperformed most regional peers, as the country's cabinet on Tuesday approved financial measures worth 350 billion baht ($11.31 billion) to help businesses cope with the impact of the pandemic.
The Thai baht dropped 0.2% ahead of a monetary policy meeting later in the day, at which the Bank of Thailand is expected to leave its key rate at a record low, but will likely cut its outlook for economic growth.
Mizuho Bank analysts said they would welcome any central bank comments on their approach to recent market volatility.