HONG KONG - Asian markets struggled on Tuesday as investors eyed the release of US inflation data later in the week that could play a key role in shaping the Federal Reserve's interest rate plans.
While the region enjoyed a healthy start to the week, there remains plenty of nervousness on trading floors after last week's upheaval in the US banking sector that hammered financial stocks.
The turmoil saw the sale of the embattled First Republic Bank to JPMorgan Chase and came just two months after the collapse of three other regional banks and the takeover of Credit Suisse by UBS.
Still, while a much-anticipated Fed survey of banks showed tighter lending standards in the first few months of the year, which they see lasting through 2023, analysts said the reading was not as bad as feared.
Focus is now on Wednesday's consumer price index report for April and the following day's wholesale prices data.
A drop in the inflation reading in recent months has fanned hopes that the Fed will soon pause its tightening campaign and even begin cutting by the end of the year, with the banking crisis reinforcing that view.
After lifting borrowing costs last week, officials hinted at a possible hold at their June meeting.
After a largely flat Monday on Wall Street, Asia was mostly in the red.
Hong Kong, Sydney, Seoul, Singapore, Wellington, Taipei and Jakarta all fell, though Tokyo and Manila edged up.
Shanghai was also higher ahead of Chinese trade data later in the day, which will be pored over for clues about the recovery in the world's number two economy.
Traders are also keeping tabs on developments in Washington as President Joe Biden prepares to talk to congressional leaders as they discuss raising the US debt ceiling.
There are worries that lawmakers will fail to reach a deal to increase the amount the country can borrow to meet its repayment obligations with right-wing Republicans determined to secure spending cuts.