Equity markets were mixed Monday as inflation concerns played off against optimism over the global economic recovery, while spiking infections in parts of the region also kept investors on their toes.
Wall Street provided a tepid lead at the end of last week, though European equities were given a boost by upbeat eurozone economic data and progress in the bloc's vaccination drive after a slow start.
With expectations that the global recovery will pick up pace this year, the main focus is now on the impact that will have on prices, with observers warning a long period of high inflation will force central banks to wind back the ultra-loose monetary policies that have helped fire a long-running market rally.
Adding to the upward pressure on inflation is US President Joe Biden's massive stimulus package passed earlier this year, while he also has others worth trillions more on infrastructure and help for families.
The Federal Reserve has repeatedly said it will not scale back on its largesse, which includes vast bond-buying and record low interest rates, until unemployment is tamed and inflation is running hot consistently.
But investors continue to worry that it might be forced to act sooner than expected.
"It's going to be a very mixed market over the next several months until we get more information on what's really going to happen with inflation and how the stimulus in the US affects spending there, but also how the coronavirus really progresses," JoAnne Feeney of Advisors Capital Management LLC told Bloomberg TV.
Oil prices rise again
A healthy reading on activity in the services industries of the United States, Britain and the eurozone reinforced expectations of a strong rebound.
The reading "should keep inflation fears alive and plays into the view of central banks needing to normalise policy earlier than their official guidance suggests", said National Australia Bank's Tapas Strickland.
He pointed out that Philadelphia Fed president Patrick Harker -- who has until recently said it was too early to tighten policy -- was in support of having a discussion on tapering "sooner rather than later", adding the turnaround appeared to come after the release of forecast-busting consumer and producer price figures.
Hong Kong, Seoul, Wellington, Manila, Bangkok and Jakarta were all in negative territory but Tokyo, Shanghai, Sydney, Singapore, Taipei and Mumbai rose.
London, Paris and Frankfurt extended last week's gains in early trade in Europe.
Bitcoin was hovering around $36,500, having earlier fallen towards $30,000 for the first time since January, with the cryptocurrency seeing extreme volatility in recent weeks following a series of tweets by tech tycoon Elon Musk and warnings of a crackdown by China.
Oil prices extended Friday's rally as the reopening narrative outshone worries about the impact on demand from a possible Iran nuclear deal that would see more of the commodity hit the world market.
A storm in the Gulf of Mexico that could develop into a hurricane has also raised the prospect of some production facilities being taken offline.
"There's a lot of vaccine-driven demand optimism in the US and Europe that's likely to be further boosted by the summer driving season next month," said Kim Kwangrae, of Samsung Futures.