Asian stock markets have tried to stabilise and oil prices came off highs after Israel and Iran said they would halt attacks on each other for now, while ever-hopeful investors bought the latest dip in semiconductor stocks.
Analysts cautioned the bounce was narrowly based with 60 per cent of the S&P 500 finishing in the red overnight even as the overall index edged up. Share futures for Wall Street and Europe were also lower in early trading.
Higher bond yields continued to test stretched equity valuations, with shipping through the Strait of Hormuz still badly restricted.
"Inflation remains sticky enough that 46 of 68 global central banks are overshooting targets, which helps explain why bond markets are repricing for tighter policy, and why long-duration assets, private credit, and several EM currencies are struggling," analysts at BofA said in a note.
"Our Global Breadth Rule shows nearly half of equity markets already overbought, led by Korea, Taiwan and Finland."
South Korea's share market climbed three per cent, having dived more than eight per cent on Monday after a run of spectacular gains left valuations stretched and retail investors with extended margin positions.
Japan's Nikkei inched up 0.3 per cent, after losing 3.9 per cent the previous session, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.9 per cent.
Chinese blue chips added 0.4 per cent as trade data showed exports rose 19.4 per cent in May and imports climbed 27.4 per cent, with both beating median forecasts. The strength shows China's success in finding new markets in the face of US tariffs and other trade hurdles, even as domestic demand struggles.
For Europe, EUROSTOXX 50 futures and DAX futures both fell 0.6 per cent, while FTSE futures dipped 0.4 per cent.
S&P 500 futures and Nasdaq futures were both down 0.3 per cent. The next big test for tech will be results from Oracle on Wednesday.
Apple shares failed to get any initial boost from a long-delayed AI overhaul of Siri, unveiled at its annual Worldwide Developers Conference.
ChatGPT-maker OpenAI confidentially filed for a US initial public offering on Monday, joining rival Anthropic in a trillion dollar rush for equity financing.
Bond markets continued to struggle as the strong May US payrolls report pushed investors to price in more risk of rate hikes from the Federal Reserve. Data on US consumer prices due Wednesday are expected to show surging energy costs kept pushing headline inflation higher in May.
Futures imply around a 60 per cent chance of a Fed rate rise as soon as October, and a quarter-point move is almost fully priced for December.
Two-year Treasury yields stood at 4.158 per cent, having hit their highest since early 2025 at 4.201 per cent overnight.
Markets are also fully priced for a quarter-point hike to 2.25 per cent from the European Central Bank when it meets on Thursday, and see the key rate at 2.5 per cent or 2.75 per cent by year-end.
The surprising strength of US employment kept the US dollar underpinned at 160.17 yen, just off an overnight top at 160.395. The next bull target is a 160.725 peak from April, though investors are wary a break could draw renewed intervention from Japanese authorities.
The euro was stuck at $US1.1527, after hitting a nine-week low at $US1.1500 overnight, while the pound edged off a three-week trough to $US1.3334.
In commodity markets, Brent crude eased 0.2 per cent to $US94.08 a barrel, after pushing as high as $US98.00 overnight, while US crude dipped 0.3 per cent to $US91.06 a barrel.
Gold slipped 0.3 per cent to $US4,316 an ounce, having touched a two-month trough at $US4,268.39 on Monday.
