Asian shares got the week off to a cautious start on June 28 as a spike in coronavirus cases across Asia over the weekend hurt investor sentiment while oil hovered around 2-1/2 year highs.
MSCI's broadest index of Asia-Pacific shares outside Japan was last a shade weaker at 703.17, still near a two-week high of 705.35 made on June 16. Australian shares slipped 0.3% while South Korea's KOSPI index was slightly higher.
Japan's Nikkei was 0.1% weaker.
Investors were concerned about a spike in coronavirus infections in Asia with Australia's most populous city of Sydney plunging into a lockdown after a cluster of cases involving the highly contagious Delta strain ballooned.
Indonesia is battling record high cases while a lockdown in Malaysia is set to be extended. Thailand too announced new restrictions in Bangkok and other provinces.
Last week, global shares reached record highs as weaker-than-expected U.S. inflation and news of a bipartisan U.S. infrastructure agreement boosted risk appetite.
The infrastructure plan is valued at $1.2 trillion over eight years, of which $579 billion is new spending.
"Investors are keenly watching the progress of U.S. President Biden's bipartisan infrastructure deal through congress. The package could boost demand significantly, driven by investment in renewables and electronic vehicle (EV) infrastructure," ANZ analysts wrote in a note.
Oil prices climbed to their highest since October 2018 in early Asian trading on expectations demand growth will outstrip supply and OPEC+ will be cautious in returning more crude to the market from August.
Brent futures rose 7 cents to $76.25 a barrel, while U.S. crude added 6 cents to $74.11.
In Asia, all attention will be on official factory activity from China due Wednesday. Manufacturing is expected to slow to 50.7 from 51. The private sector Caixin Manufacturing PMI will follow later in the week.
On Friday, the S&P 500 rose 2.7% for the week, its strongest weekly gain since early February after data showed a measure of underlying inflation rose less than expected in May, easing fears of a sudden tapering in stimulus by the Federal Reserve.
The Dow climbed 0.7% while the tech-heavy Nasdaq dropped 0.06% after holding near the previous session's record high. MSCI's gauge of stocks across the globe closed at a record high of 721.91.
"The Fed is widely expected to advance its communication on tapering during Q3. The baseline market expectation is that tapering will start in January and run at US$10 billion per month," ANZ economists said.
"However, if inflation stays elevated, tapering might have to start sooner and happen at a faster pace."
Views on inflation outlook remain mixed though, underlining market caution over potential volatility ahead of key economic data and corporate earnings reports.
Bank of America's top strategist Michael Hartnett wrote in a note that U.S. inflation will remain elevated for two to four years, and only a market crash will prevent central banks from tightening in the next six months.
Later in the week, a closely-watched U.S. jobs report will be released for June which could point to strong labour demand.
Yields for benchmark 10-year U.S. Treasuries, jumped back above 1.50% to close out a week in which rates notched their largest gains since March.
Monetary and fiscal stimulus around the world in response to the COVID-19 pandemic is boosting financial assets, despite an uneven pace of recovery between regions.
Boston Federal Reserve Bank President Eric Rosengren on Friday warned a build-up of financial stability risks linked to a low interest rate environment could lead to another downturn that interrupts the labor market recovery and impedes a return to maximum employment.
Activity was muted in currencies. The U.S. dollar was steady against a basket of other currencies, in choppy trading.
The Japanese yen meandered around 110.80 versus the greenback and the euro was flat too at $1.1936.
In commodities, spot gold added 0.1% to $1,782.2 an ounce as the lower-than-expected U.S. personal consumption eased concerns of higher inflation and tighter monetary conditions, boosting investor demand for the yellow metal.