Asian markets stumbled on Monday after China delivered a smaller cut to lending rates than markets had counted on, continuing Beijing's run of disappointing stimulus steps.

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China's central bank trimmed its one-year lending rate by 10 basis points and left its five-year rate unmoved, a surprise to analysts who had expected cuts of 15 basis points to both.

Disappointment at the meagre move saw Chinese blue chips (.CSI300) ease 0.3 per cent, while the Australian dollar took a dip as a liquid proxy for China risk.

Investors have been hoping for a repeat of the massive fiscal spending that has juiced the economy in the past, but Beijing seems reluctant to add to its borrowing tasks.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) slipped 0.3 per cent to a fresh low for the year, adding to a 3.9 per cent dive last week.

Japan's Nikkei (.N225) was still up 0.3 per cent, though that follows a 3.2 per cent drop last week.

EUROSTOXX 50 futures and FTSE futures were near flat. S&P 500 futures were 0.1 per cent firmer, while Nasdaq futures added 0.2 per cent. Earnings from AI-darling Nvidia (NVDA.O) on Wednesday will be a major test of valuations.

Analysts are concerned the market has got too long, especially of tech, leaving it vulnerable to a deeper pullback.

BofA's latest survey of fund managers found sentiment was the least bearish since February 2022, while cash levels were at nearly a two-year low, and 3 out of 4 surveyed expect a soft landing or no landing for the global economy.

Analysts at Goldman Sachs, meanwhile, argue there is still scope for investors to add to equity positions.

"The re-opening of the buy-back blackout window will provide a boost to equity demand in coming weeks although a flurry of expected equity issuance this fall may provide a partial offset," they wrote in a note.

PARSING POWELL

Stock valuations have been pressured in part by a sharp rise in bond yields, with the US 10-year hitting 10-month highs last week at 4.328 per cent.

Early Monday, yields were up again at 4.28 per cent and a break above 4.338 per cent would take them to levels not seen since 2007.

Markets assume Federal Reserve Chair Jerome Powell will note the jump in yields at the Jackson Hole conference this week, and the recent run of strong economic data. The Atlanta Fed's GDP Now tracker is running at a heady 5.8 per cent for this quarter.

"It's an opportunity for Powell to give an updated assessment on economic conditions, which now appear stronger than anticipated and reinforce the case for additional rate hikes," said Barclays analyst Marc Giannoni.

"Even so, we would be surprised if he provided specific guidance, with key August prints for employment, CPI and retail sales all to come before the September meeting."

A majority of polled analysts think the Fed is done hiking, while futures imply around a 31 per cent chance of one more increase by December.

The rise in yields has helped the dollar notch five weeks of gains and a nine-month top on the Japanese yen at 146.56 . On Monday, it was trading at 145.30 with the market wary of risk of Japanese intervention.

The euro was also firm at 157.96 yen , but under pressure from the dollar at $1.0871 after losing 0.7 per cent last week.

The ascent of the dollar and yields was weighing on gold at $1,887 an ounce , having touched a five-month low last week.

Oil prices edged higher on Monday, having snapped a seven-week winning streak as concerns about Chinese demand offset tight supplies.

Brent was up 38 cents at $85.18 a barrel, while US crude bounced 45 cents to $81.70 per barrel.

Prices for liquefied natural gas (LNG) were underpinned by the risk of a strike at Australian offshore facilities that could affect around 10 per cent of global supply.