Asian markets rose Tuesday after another record high on Wall Street, with all attention on the release of key US inflation data due later in the day.
Traders are hoping the consumer price index reading shows a continued downward trend, which would give the Federal Reserve room to lower interest rates.
However, there is resignation on trading floors that a March cut is out of the question after decision-makers warned they wanted to see more positive indicators, with May now tipped as seeing the first shift downward.
The CPI report is forecast to come in below three percent on-year for the first time since March 2021, according to Bloomberg News.
Expectations inflation will come down to the Fed's two-percent target this year, allowing the bank to ease monetary policy, have been a key driver of a market rally that has pushed the Dow and S&P 500 to multiple records this year.
However, some observers pointed out that there could be an upward surprise as many businesses had lifted prices to boost their margins.
And SPI Asset Management's Stephen Innes added: "The dreaded top side beat would throw ice water on the easing inflation story, send May cut probability tumbling south of 50 percent and upend a stock market rally looking for more boost juice from a dovish Fed.
"The US isn't out of the woods yet on the inflation front, even if markets are keen to pretend otherwise."
As most of the region returned to work after a long weekend in several countries, Tokyo led advances thanks to a near-10-percent surge in SoftBank, which was boosted by another blockbuster day for its US-listed unit Arm.
Arm has almost doubled in value in the past week -- and trebled since its September listing -- owing to healthy demand for chips fuelled by an expected boom in artificial intelligence.
There were also gains in Seoul, Sydney, Singapore and Manila.
Hong Kong, Shanghai and Taipei remained closed for the Lunar New Year break.
The gains in Asia came after the Dow chalked up a new record high, though the S&P 500 edged down after hitting an all-time peak Friday. The Nasdaq was also slightly off.
Tokyo - Nikkei 225: UP 2.4 percent at 37,798.89 (break)
Hong Kong - Hang Seng Index: Closed for holiday
Shanghai - Composite: Closed for holiday
Euro/dollar: DOWN at $1.0764 from $1.0776 on Monday
Dollar/yen: UP at 149.38 yen from 149.33 yen
Pound/dollar: DOWN at $1.2616 from $1.2630
Euro/pound: UP at 85.33 pence from 85.29 pence
West Texas Intermediate: UP 0.1 percent at $77.01 per barrel
Brent North Sea Crude: UP 0.1 percent at $82.04 per barrel
New York - Dow: UP 0.3 percent at 38,797.38 (close)
London - FTSE 100: FLAT at 7,573.69 (close)
