Equities were mixed Tuesday, as traders await more measures by China to stimulate its economy and support the creaking property market, while fresh services data reinforced the need for action.
There was little reaction to reports that struggling developer Country Garden had paid interest on its dollar-denominated bonds, avoiding a messy default, but the firm's cash woes showing no sign of ending as more loans must be serviced in the coming weeks.
A series of announcements out of Beijing recently has helped lighten the mood on trading floors after months of dour data indicating the country's post-Covid recovery has hit a wall.
The sentiment was also helped by a positive US jobs report on Friday, which was seen as giving the Federal Reserve room to stand pat on monetary policy after more than a year of interest rate hikes.
However, with Wall Street closed Monday for a holiday and providing no catalyst, there was little desire in Asia to continue the buying.
Investors are hoping Chinese authorities push ahead with more help for the property industry, having introduced in the past week a number of measures including reducing mortgage down payments and providing tax incentives.
"Although individual regulatory changes may not cause significant market shifts, the combined impact of several rapid adjustments sends strong signals," said Redmond Wong at Saxo.
"This suggests the potential for a sustained rally in both Hong Kong and mainland Chinese equity markets in the near term."
Country Garden, which has liabilities worth around $200 billion, was once again in focus as it said it met its interest payments of more than $20 million.
The reports come after the firm won approval from creditors last week to extend a deadline for a key repayment, narrowly avoiding a potential default.
There is a worry that a default could be bigger than that at Evergrande in 2021, as it has four times as many projects.
A report showing China's services sector grew last month at a much slower pace than expected added to the negative sentiment Tuesday.
"The recovery in China's services sector, or even consumption, is ongoing but not as strong as people had expected," Larry Hu, of Macquarie Group, said.
"People are not very optimistic about their future income due to the economic woes, and so they tend to save more."
Hong Kong fell almost two per cent — though struggling mainland developers including Evergrande and Sunac soared — and Shanghai was also well in the red.
There were losses in Sydney even as the Australian central bank held interest rates for a third successive meeting, while Seoul, Singapore, Wellington and Jakarta were also off.
London, Paris and Frankfurt opened in the red.
But Tokyo, Taipei, Manila, Mumbai and Bangkok eked out gains.
Shane Oliver at AMP Capital was hopeful about the outlook as the Fed and its peers look to call an end to their rate hikes thanks to a string of data suggesting inflation is going in the right direction.
"Central banks have eased their tightening bias, but they still have a tightening bias," he told Bloomberg Television.
"The volatility will remain high at the very least, but if we do get a pullback, I would see that as a buying opportunity because the inflationary pressures globally are easing and then ultimately will take pressure off central banks."