Asian shares inched higher on Tuesday, mirroring modest gains on Wall Street, but the U.S. dollar stalled after a dramatic advance as month-end flows boosted confidence and investors readjusted to the prospect of additional interest rate hikes.
Chinese shares were up 0.4%, while Hong Kong's Hang Seng index was up 1%, but was poised to halt its three-month winning run as the China reopening surge wanes.
MSCI's broadest index of Asia-Pacific equities excluding Japan rose 0.25%, but was expected to finish the month down almost 6%. The Nikkei increased 0.44%, while the S&P/ASX 200 index in Australia rose 0.51%.
Rising geopolitical tension has also dragged on China's stock market, with U.S.-China ties being the primary source of concern for investors.
As traders adjust portfolios and market exposure at the end of the month, according to ActivTrades market analyst Anderson Alves, month-end flows will likely impact short-term price activity.
"Investors are likely to be monitoring any escalation from the Russia-Ukraine war," Alves said. "Any concrete action from China in support of Russia could be seen as a strong rationale for a derisk and deleverage from Asian exposure."
Overnight, U.S. stocks eked out a tiny gain as investors engaged in bargain shopping following last week's sharp losses, despite lingering fears about upcoming interest rate hikes to combat persistently rising inflation.
Monday's data indicated that U.S. orders for core capital goods advanced in January, exceeding expectations, while contracts to purchase previously owned U.S. homes rose the most in over two and a half years in January.
Friday's more robust-than-anticipated personal consumption expenditure report strengthened views that the U.S. Federal Reserve will need to maintain its hawkish stance for longer.
Fed futures now depict rates peaking at approximately 5.4%, meaning at least three more increases from the current 4.50-4.75 percent range, with a likelihood of a 50 basis point increase in March.
The dollar index, which compares the U.S. dollar to six other currencies, gained 0.048% and was poised to end a four-month losing streak.
U.S. crude increased 0.13%to $75.78 per barrel, while Brent decreased 0.19% to $82.29 per barrel.
Sterling was last trading at $1.206, down 0.02% on the day, having risen 1 percent overnight after Britain reached a new trade agreement with the European Union, which improved the prospects for the U.K. economy post-Brexit.
The euro fell 0.07% to $1.06 on Tuesday, after gaining 0.6% on Monday.
