Asian stocks traded cautiously on Monday as U.S. earnings season gets into full swing this week, while a raft of Chinese data will offer insight into how the world's second-largest economy is recovering.
Markets have also seen a mood shift on the outlook for U.S. interest rates, with CME futures implying an 81% chance the Federal Reserve will hike by a quarter point to 5.0-5.25% in May.
Resilience in core U.S. retail sales and a jump in inflation expectations reported on Friday have led investors to trim the amount of easing expected later this year to around 55 basis points (bp).
"Early April data on the labour market, inflation and consumption all indicate the Fed has more work to do and that a soft or bumpy landing is a greater probability than a sharp and relatively sudden contraction in activity," said analysts at ANZ in a note.
"Our baseline view is for two more 25 bp hikes and, if data does not start to weaken soon, the market will need to reprice for no rate cuts in the second half of this year."
At least eight top Fed officials are speaking this week, including three governors, and could generate plenty of headlines to move the dial further.
The resulting caution saw MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) ease 0.2%, while Japan's Nikkei (.N225) went flat.
EUROSTOXX 50 futures and FTSE futures both edged up 0.2%.
Chinese blue chips (.CSI300) added 1.0% ahead of data on retail sales, industrial output and gross domestic product due on Tuesday, where analysts suspect the risks are for an upside surprise given recent strength in trade.
Figures over the weekend showed new home prices climbing at the fastest pace in 21 months, supporting consumer demand and confidence.
