NEW YORK, RAW – Asian stocks have started off on a weak footing on Tuesday after a largely soft performance on Wall Street and as persistent concerns over the spread of the Delta variant of the coronavirus dented sentiment and triggered falls in metals and oil prices.

MSCI’s broadest index of Asia-Pacific shares outside Japan declined 0.4 per cent in early trading, with Korea’s KOSPI index down 0.56 per cent while China’s blue chip index CSI300 shed 0.33 per cent.

“With the Delta variant spreading, money managers who were over-invested in the re-opening trade continue to unwind that trade because it’s not working right now,” said Dennis Dick, a trader at Bright Trading LLC.

Japan’s Nikkei was UP 0.9 per cent while Australia’s benchmark S&P/ASX200 was 0.2 per cent higher on the back of strong earnings results.

Oil prices were recovering on Tuesday after falling as much as 4 per cent in the previous session, which extended last week’s steep losses amid a rising US dollar and concerns that new coronavirus-related restrictions in China could slow a global revival in fuel demand.

US crude oil futures were trading at $US66.82 ($A91.09) per barrel, up $US0.35 ($A0.48) or 0.53 per cent. Brent crude was at $US69.29 ($A94.45), up $US0.25 ($A0.34) or 0.36 per cent higher.

Gold stabilised after falling to a more than four-month low on Monday as strong US jobs data bolstered expectations for an early tapering of the Federal Reserve’s economic support measures.

Spot gold XAU was fetching $US1,732.13 ($A2,361.14) an ounce, up 0.16 per cent.

The strong jobs data lifted US Treasury yields. Benchmark 10-year notes were last yielding 1.3237 per cent, up from 1.3170 per cent on Monday.

“Having swum from a very inflation-better opinion this year to a very disinflation view up to a week or so again, so what we are we getting now again is another rotation into some of the reflation trades,” said Sean Darby, a Jefferies strategist in Hong Kong.

“The only thing that is different between now and the last 12 to 19 months is that it is likely to be accompanied by a stronger dollar.”

US stock indexes were mostly soft, with the Dow Jones Industrial Average down 0.3 per cent, the S&P 500 off 0.09 per cent while the Nasdaq Composite added 0.16 per cent. MSCI’s gauge of stocks across the globe were 0.03 per cent lower.

In the US, the Senate came closer to passing a $US1 trillion ($A1.4 trillion) infrastructure package, though it still has to go through the House.

Investors were still assessing whether Friday’s strong US payrolls report would take the Fed a step nearer to winding back its stimulus.

“What we’re seeing is a little bit of early profit-taking on the back of fear that tapering will come in earlier in September,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.

“But as you can see, it has little impact because the effect of a better economy far outweighs the substitution effect of higher interest rates.”

However, the pace of tapering was still up in the air and would decide when an actual rate increase comes, he said. The Fed is currently buying $US120 billion ($A164 billion) of assets a month.

The spread of the Delta variant could argue for a longer taper.

On the plus side, stocks have been mostly underpinned by a robust US earnings season. BofA analysts noted S&P 500 companies were tracking a 15 per cent beat on second-quarter earnings with 90 per cent having reported.

In the currency markets, the dollar index moved 0.02 per cent higher, with the euro off 0.03 per cent to $US1.1732 ($A1.5992), its lowest since early April.

The dollar held firm against the yen at 110.38 yen, near its highest level in about two weeks.

The US currency’s broad rally came as US Treasury yields spiked to three-week highs on the back of the strong jobs data and early Fed taper speculation.