Most Asian equities rose while bond yields remained elevated, as investors awaited US Federal Reserve Chairman Jerome Powell's Congressional testimony later for clues into the central bank's thinking on inflation expectations and rising yields.
Yields on benchmark 10-year bonds in the region stood at multi-month highs as investors recently sold Asian bonds after a jump in US Treasury yields.
A recent rally in Asian equities has been capped by rising bond yields. Higher bond yields are generally seen as a negative for equities as they diminish the attraction from stocks' dividend payouts, while debt servicing for companies becomes more expensive due to higher borrowing costs.
"This explains why equities across the Asia-Pacific have entered a consolidative phase in the last couple of days. Stocks have rallied a fair bit since March, making them vulnerable to rising yields, particularly in the tech sector," said Margaret Yang, strategist at DailyFX.
"Powell's testimony will be closely eyed to see how tolerant the Fed is in view of rising yields, and how they will address a strengthening inflation outlook."
Most Asian emerging currencies inched higher as the dollar hit a six-week low.
The Indian rupee rose to 72.333 per dollar. It has risen continuously for the last three months, and is up nearly 1% so far in February.
Analysts at HSBC recently raised their growth forecasts for India to 11.2% from 9% for the coming fiscal year, noting that the country was experiencing a remarkably strong recovery amid a sustained decline in Covid-19 cases.
"By some measures, industrial activity is only a few percentage points below its pre-pandemic peak. Mobility, too, has largely recovered, which should help spur services demand, which is still 25% below pre-pandemic level, in the coming months."
Philippine equities closed flat after falling 1% earlier after the government extended coronavirus restrictions in the capital Manila late on Monday.
Manila - which accounts for 40% of the Philippines' economic output and has been under partial curbs since August - will see partial curbs retained until vaccinations start, limiting the operating capacity of businesses and public transport.
"We don't know how long it will take before the vaccine can be effectively rolled out and lockdown measures can be lifted. Even once the vaccination is kicked off, it will take sometime, and the efficacy of the vaccine to the public is unknown," said DailyFX's Yang.
The inoculation drive in the Philipines is expected to start with 600,000 doses of the Sinovac Biotech vaccines donated by China, which is expected to arrive later this month.
Stock markets were shut in Japan due to a public holiday.