Asian markets fluctuated Tuesday as hopes for the rollout of coronavirus vaccines and a new stimulus out of Washington competed with fears over surging infections, new lockdowns and brewing political and social unrest in the United States.
While analysts' long-term outlook remained positive as more people are inoculated and life returns to normal, frighteningly high new case numbers and deaths around the world - and the resulting lockdowns - kept a cap on buying.
Germany's BioNTech provided some good news as it said it expected to produce 2 billion doses of its vaccine this year, up from the previous forecast of 1.3 billion, lifting hopes that more people could get the jab earlier.
That came as seven mass vaccination sites were opened across England, where a new strain of the disease is putting huge pressure on the National Health Service that has forced leaders to ramp up economically painful containment measures.
The main focus of attention for traders is Washington, where Democrats are pushing ahead with a historic second impeachment of Donald Trump as they accuse him of inciting Wednesday's storming of the Capitol Building that delayed lawmakers' certification of Joe Biden's election win.
Observers said the chances of Trump being convicted were slim but there was a concern that the latest moves could foment more unrest, with some reports saying the president's supporters were planning fresh demonstrations at the weekend and during Biden's inauguration next week.
There is a worry that the move by the Democrats could distract from their plans for a new, bigger stimulus bill to fight off the effects of the rampaging virus with some warning the row could overshadow the new president's first few months in office.
Biden has called for a package in the trillions including $2 000 cash handouts, though analysts said that - while markets would welcome a spending splurge - there were concerns about the financial implications.
Bets on another rescue deal have ramped up inflation expectations, with 10-year Treasury yields above one percent for the first time since March and talk swirling that the Federal Reserve could begin considering winding down its vast bond-buying scheme.
"Ultimately it goes back to the 10-year," KC Rajkumar and Jahanara Nissar at Lynx Equity Strategies said. A higher yield "points to higher inflation down the road -- which is negative for stocks. We are not there yet, but as the 10-year inches higher - the closer we get."
Wall Street's three main indices fell Monday, having ended last week at record highs, and Asian markets were mixed.
Tokyo, Hong Kong, Shanghai, Mumbai and Jakarta all rose but Sydney, Seoul, Singapore, Taipei, Manila and Wellington fell.
"While the structural catalysts of vaccine distribution and activity normalisation remain intact, we are now potentially approaching the last stage of fiscal stimulus, and the Fed is on a path to tapering the pace of asset purchases," said Axi strategist Stephen Innes.
"Whether one wants to discuss the epidemic or the (Washington) situation, there's light at the end of the tunnel. The problem is that, for now, the green light has temporarily given way to a state of investors' political angst.
"Fortunately, the promise of brighter days ahead on the back of the three-pronged puts of vaccination, fiscal and monetary policy backstops make it difficult for equities to sell off in a determined fashion."
Bitcoin was struggling to bounce back after tanking more than a quarter in the space of three days after hitting a record near $42 000, while Britain's Financial Conduct Authority warned investors to "be prepared to lose all their money" betting on the ultra-volatile cryptocurrency.