SYDNEY - Asian shares struggled to make much ground on Monday as fading chances for early rate cuts globally soured the mood.

A holiday for US markets also made for thin trading, while the latest surge in tech stocks is set to be tested by results from AI diva Nvidia on Wednesday.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat, after bouncing 2 percent last week.

Japan's Nikkei dipped 0.1 percent, having surged more than 4 percent last week to stop just short of its all-time high.

EUROSTOXX 50 futures also eased 0.3 percent and FTSE futures lost 0.2 percent.

In the United States, high readings on producer and consumer prices saw markets sharply scale back pricing for rate cuts.

Bruce Kasman, global head of economics at JPMorgan, warned the Federal Reserve's favored measure of core personal consumption inflation could now jump by 0.5 percent in January. Only a week ago, markets were hoping for a rise of just 0.2 percent.

"While it is premature to place significant weight on noisy January data, risks have shifted in the direction that core inflation and labor market conditions both surprise the Fed in a hawkish direction in the first half of 2024," Kasman wrote in a note.

"This stall has been expected to delay the start of the developed world easing cycle to midyear, and curb enthusiasm about the overall magnitude of the easing cycle ahead."

Futures have sunk to imply just a 28 percent chance rates will be cut in May, when it was considered a done deal a couple of weeks ago. Markets have taken out two quarter point rate cuts for this year to imply less than 100 basis points of easing.

Hanging on Nvidia

The surprise on inflation means the minutes of the Fed's last policy meeting out this week now look dated, but any talk about the timing of potential cuts will be noted.

There are plenty of Fed speakers out this week to comment on the outlook, with Fed Vice-Chair Philip Jefferson and Governor Christopher Waller of particular interest.

The market sea change on rates saw two-year Treasury yields spike to a new 2024 high of 4.72 percent on Friday before steadying at 4.65 percent. Treasury futures were little changed on Monday with the cash market closed.

S&P 500 futures were flat, while Nasdaq futures added 0.24 percent helped by hopes Nvidia could somehow beat already stratospheric expectations.

The chipmaker's stock has surged 46 percent so far this year and accounted for more than a quarter of the S&P 500's gains. There is reason for optimism given that of the 80 percent of S&P 500 reporting so far, 75 percent have beaten forecasts.

Goldman Sachs cited profits in the tech sector last week when it raised its year-end S&P 500 index target to 5,200, from 5,100.

"Our upgraded 2024 EPS forecast of $241 - 8 percent growth - stands above the median top-down strategist forecast of $235," said Goldman. "We expect P/E valuation multiples will remain close to current levels, making earnings growth the primary driver of remaining upside this year."

Higher bond yields were underpinning the dollar at 149.99 yen, though the threat of intervention has so far capped it at 150.88. The euro has also reached its highest so far this year on the yen at 161.95.

The single currency was steady on the dollar at $1.07825, having met resistance just above $1.0800.

The rise in yields has been a burden for non-yielding gold, which was a shade firmer at $2,020.85 an ounce.

Oil prices were softer in early trade as concerns about demand tussled with the threat of supply disruptions in the Middle East.

Brent slipped 65 cents to $82.82 a barrel, while US crude for April fell 51 cents to $78.68 per barrel.