(AFP)
Asian markets were mixed on Monday amid simmering concerns that the Federal Reserve will not cut interest rates as hoped next month, while fears of a bubble continue to weigh on sentiment.
The tepid mood on trading floors also dragged on the crypto sector, with bitcoin briefly erasing all its gains this year -- just over a month after hitting a record high.
Stocks have enjoyed a healthy rally since their tariff-fuelled swoon in April, with tech firms leading the way as companies pumped eye-watering amounts of cash into all things linked to artificial intelligence.
That has been compounded by a weakening US jobs market that has fanned expectations the Fed will cut rates.
However, the gains have petered out in recent weeks as investors re-evaluate those two pillars.
Fed boss Jerome Powell said a third-straight reduction in borrowing costs was not certain next month, while other officials have hinted they intend to stand pat.
The decision makers said they were concerned that inflation remained stubbornly anchored above the bank's two percent target, overshadowing labour market fears.
Traders are keenly awaiting the release of several reports -- including on jobs and inflation -- that had been held up by the record government shutdown that ended last week.
The winding back of rate cut bets comes amid growing unease about the sky-high valuations in the tech sector and warnings that a bubble has formed that could soon burst.
All eyes are on this week's release of earnings from chip titan Nvidia, which this month became the first $5 trillion company.
"Worries about an AI bubble have weighed on the sector, and investors are questioning not only the amount of money companies are spending on the tech relative to the returns they're seeing, but also the circular nature of the spending."
After a tepid lead from Wall Street, Asian markets fluctuated.
Shanghai and Singapore all dropped, though Seoul, Manila, Bangkok and Wellington advanced. Sydney was barely moved.
Tokyo also sank as figures showed Japan's economy shrank 0.4 percent in the three months to September.
Bitcoin was also suffering from the uncertain climate on trading floors, with the digital unit briefly dropping to $92,935.51 -- below the $93,714 mark it finished at on December 31 -- according to Bloomberg data. It bounced back slightly in the afternoon to sit above $95,000.
The cryptocurrency hit a peak of $126,251 on October 6.
Investors spend most of the year piling into bitcoin after Donald Trump returned to the White House pledging to deregulate the crypto sector.