Asian shares edged up in early trade on Tuesday, following an upbeat session on Wall Street while investors turned their attention to key U.S. inflation data and the Federal Reserve's interest rate decision this week.

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Investors will be closely monitoring U.S. Consumer Price Index (CPI) data, due to be released on Tuesday, and Producer Price Index (PPI) data, due out Wednesday, for a reading of how well the Fed's tightening cycle has managed to curb inflation.

The equity index's gains partly reflected expectations for a Fed tightening pause for the first time since January 2022 and for CPI and PPI to come in lower than the prior month, investors and strategists said.

"Overall equity markets reacted positively to expectations the monetary policy cycle may be nearing its peak," ANZ analysts said in a note. "U.S. markets are now pricing a 72% probability that the Federal Reserve Monetary Policy Committee (FOMC) will hold rates at this week's meeting."

In China, to prop up the economy, the central bank cut its seven-day reverse repo rate by 10 basis points to 1.90% from 2.00% on Tuesday, when it injected 2 billion yuan ($279.97 million) through the short-term bond instrument. read more

Early in the Asian trading day, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up 0.3% while U.S. stock futures - the S&P 500 e-minis - rose 0.1%

Japan's Nikkei (.N225) advanced 1.59% and Australian shares (.AXJO) were down 0.03%.

China's blue-chip CSI300 index (.CSI300) was 0.05% higher in early trade. Hong Kong's Hang Seng index (.HIS) opened down 0.2%.

On Monday, the S&P 500 (.SPX) and the Nasdaq (.IXIC) rallied to their highest closing levels since April 2022.

Lifted by gains in market heavyweights Amazon (AMZN.O), Apple (AAPL.O) and Tesla (TSLA.O), the S&P 500 has recovered 21% from its October 2022 lows, heralding the start of a new bull market, as defined by some market participants.

The S&P 500 climbed 0.93% to end the session at 4,338.93 points. The Nasdaq gained 1.53% while Dow Jones Industrial Average (.DJI) rose 0.56%.

While the Fed is expected to keep rates steady, surprise rate hikes by the Reserve Bank of Australia and the Bank of Canada last week have still kept investors alert to the idea of prolonged tightening cycles.

The European Central Bank will deliver its rate decision on Thursday with analysts expecting it to raise rates by 25 basis points (bps) and to signal that there is more ground to cover. But the Bank of Japan, which will announce its plan on Friday, is expected to maintain its ultra-loose policy. read more