Asian stocks edged lower as traders returned their focus to China’s efforts to halt its economic malaise after markets in the US were shut for the US Labor Day holiday.

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Stocks opened lower in South Korea after inflation accelerated much faster than estimates in August on the back of higher energy costs, reinforcing the case for the central bank to keep the door open to further policy tightening to rein in prices.

Shares also declined in Japan and Australia, where the Reserve Bank of Australia is set to keep rate unchanged for the third straight month in a meeting later Tuesday.

“With inflation expectations still elevated, the central bank is likely to maintain a hawkish bias — and keep it through the second half of 2023,” according to James McIntyre at Bloomberg Economics. “We see the RBA starting to cut rates in the first quarter of 2024.”

Futures for Hong Kong’s Hang Seng index, which jumped almost 3 percent Monday before paring gains, declined. That came after European shares failed to provide a strong lead for investors, with the Stoxx 600 gauge closing little-changed in low-volume trading after rising as much as 0.8 percent earlier. US equity futures were subdued in Asia trading.

Traders will be monitoring if Hong Kong and mainland China stock markets will be able to sustain Monday’s advances. The country’s beleaguered property sector is getting a boost from the announcement that down-payment thresholds across the nation would be lowered, with Shanghai and Beijing seen as benefiting the most.

A Bloomberg gauge of Chinese developers jumped as much as 8.7 percent on Monday, with sentiment improving further after news of a weekend surge in home sales in two of its biggest cities, an early sign that government efforts to cushion a record housing slowdown is helping.

China’s PMI composite and services data to be released Tuesday will provide further indications on whether Asia’s biggest economy is starting to emerge from its post-pandemic torpor.

The dollar steadied, while Treasuries slightly lower across tenors as cash trading resumed. Australian bonds also fell ahead of the central bank’s meeting, with yield on the three-year rising two basis points and that on the 10-year up three basis points.

While Treasury markets were closed on Monday, bond yields inched higher in the euro zone, with rate-setters seemingly divided on whether policy needs to be tightened further this month, given above-forecast inflation and sluggish growth. In a speech in London, European Central Bank President Christine Lagarde avoided signaling whether policymakers will raise or hold interest rates next week.

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