Stocks wavered in nervous trade Tuesday as investors struggled to pick up the baton from a Wall Street rally, with the mood darkened by concerns over China's economy and the outlook for US interest rates.
Markets globally have struggled this month on the prospect that the Federal Reserve will hike borrowing costs once more before the end of the year as it looks to bring inflation to heel.
A string of data out of Washington in recent weeks has indicated the world's top economy remains resilient and the jobs sector tight, even after more than a year of tightening.
However, there are fears that a further turning of the screw could be fatal.
A planned speech this week by Fed chief Jerome Powell at a gathering of central bankers and business leaders will be closely watched for some guidance on officials' thinking and future policy.
The remarks come as debate swirls among policymakers and investors over whether more work is needed, though some observers say the market had largely priced in another rate hike.
PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ find the “Recommended for you” block on the home page and enjoy!
"Each incremental hike that they have from here just raises the risk that we have a much sharper slowdown in 2024 and perhaps even a recession," Lori Heinel, at State Street Global Advisors, told Bloomberg Television.
However, she added that "as long as inflation remains contained, we think that they will take a pause here".
On Wall Street, the Nasdaq surged more than one percent thanks to strong buying in big-name tech titans including Amazon, Microsoft and Facebook parent Meta.
The positive lead from New York partially filtered through to Asia.
Hong Kong kicked higher after seven straight losses, thanks to a rally in Chinese tech firms.
Shanghai, Tokyo, Sydney, Seoul, Taipei and Jakarta also advanced but Singapore, Wellington and Manila edged down.
Still, there is still a lot of unease among traders about the Chinese economy, with another small cut in interest rates doing little to allay fears of a painful slowdown.
While authorities have pledged a series of measures to get the post-Covid recovery back on track, there has been little detail, and they are facing growing calls to unveil more wide-ranging stimulus.
"There are doubts about the effectiveness of further monetary policy stimulus ability to support sluggish credit demand, with the narrower follow-through from the lending finance rate last week leaving hopes for broader stimulus with fiscal policy," said National Australia Bank's Taylor Nugent.
Key figures around 0230 GMT
Tokyo - Nikkei 225: UP 0.7 percent at 31,776.06 (break)
Hong Kong - Hang Seng Index: UP 0.4 percent at 17,688.08
Shanghai - Composite: UP 0.1 percent at 3,095.39
Euro/dollar: UP at $1.0909 from $1.0897 on Monday
Pound/dollar: UP at $1.2768 from $1.2755
Euro/pound: UP at 85.44 pence from 85.41 pence
Dollar/yen: DOWN at 146.07 from 146.22 yen
West Texas Intermediate: DOWN 0.1 percent at $80.65 per barrel
Brent North Sea crude: DOWN 0.2 percent at $84.32 per barrel
New York - Dow: DOWN 0.1 percent at 34,463.69 (close)
London - FTSE 100: DOWN 0.1 percent at 7,257.82 (close)