Asian share markets retreated on Tuesday as global investors awaited India’s official election results and assessed signs that the U.S. economy’s ‘exceptionalism’ might be unwinding due to weakening manufacturing activity.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4%, following mild gains in U.S. stocks the previous session. Despite this, the index is up 2.1% for the month so far.

Australian shares dropped 0.15%, and Japan’s Nikkei index slid 0.11%. In contrast, Hong Kong’s Hang Seng Index rose 0.33%, and China’s CSI300 Index increased 0.23% after initially opening lower.

In India, markets plunged sharply after early vote counting indicated that Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP)-led alliance might not secure the landslide victory predicted by exit polls. Analysts had anticipated a Modi victory would boost the country’s financial markets due to hopes for further economic reforms.

The Nifty index dropped 5.43% to 22,000.60 points, while the BSE index fell 5.4% to 72,337.34 points. Both indexes had reached all-time highs on Monday but recovered slightly to trade down about 2.3% each.

In early European trades, the pan-region Euro Stoxx 50 futures slipped 0.1% to 5,007, German DAX futures were down 0.21% at 18,615, and FTSE futures dropped 0.09% to 8,265.5. U.S. stock futures, specifically the S&P 500 e-minis, edged up 0.01% to 5,297.8.

Attention will be on the U.S. labor market in the coming days, with the Job Openings and Labor Turnover Survey (JOLTS) due on Tuesday and non-farm payroll figures for May expected on Friday.

“We’re expecting a slight easing in demand for labor in the U.S. market,” said Raisah Rasid, JPMorgan Asset Management’s global market strategist. “What does that mean for the Fed? I think all data points to one interest rate cut later in the year, potentially in December. If the data moves in a different direction than expected, that cut could be moved forward to September.”

In Hong Kong, the Hang Seng Mainland Property Index rose 2.5% after a Citigroup research note upgraded the target prices for 23 Chinese property companies. “We are starting to see more green shoots in China, especially after the measures and stimulus revealed for the property sector,” said David Chao, Invesco Asia Pacific’s global market strategist.

The yield on the benchmark 10-year U.S. Treasury note reached 4.4099%, compared to Monday’s close of 4.402%. The two-year yield, which typically rises with traders’ expectations of higher Fed fund rates, touched 4.8245%, compared to 4.818% at the previous U.S. close.

On Monday, U.S. Treasury yields fell to their lowest in two weeks after the country’s manufacturing activity declined for a second straight month in May. The two-year yield dropped by 6 basis points, while the 10-year yield fell by 11 basis points.

“The sharper move at the long-end is a sign that weaker manufacturing data is unlikely to shift the dial on Fed rate cuts near term, but is perhaps a signal of the market’s view of neutral interest rates as U.S. economic exceptionalism fades,” Westpac economist Jameson Coombs noted on Tuesday.

In Europe, investors expect the European Central Bank on Thursday to cut the benchmark rate by 25 basis points to 3.75%.

The dollar rose 0.13% against the yen to 156.3 in Asian trading on Tuesday, still some distance from its high this year of 160.03 in late April. The euro was up 0.1% at $1.0912, having gained 0.65% this month, while the dollar index, which tracks the greenback against a basket of major currencies, was down at 104.

U.S. crude dipped 0.88% to $73.57 a barrel, and Brent crude fell to $77.77 per barrel. Both benchmarks had slid to four-month lows on Monday after the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, agreed to start unwinding some production cuts from October.

Gold prices were slightly lower, with spot gold trading at $2348.64 per ounce.

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