Asian shares fell on Tuesday as concerns about new coronavirus epidemics in the region could undermine an economic recovery, despite the fact that the United States is experiencing strong momentum. The Federal Reserve may consider a faster exit from its accommodative policy.MSCI's Asia-Pacific share index was 0.1% lower than its previous highs. However, momentum is slowing down as countries re-impose restrictions to stop the spread of the Delta virus variant.The early losses were most severe for Japanese and Australian shares, with the ASX/200 down 0.76% and Nikkei falling 0.911%. South Korea's market was 0.3% lower and Chinese stocks were also lower by 1.06%.Fears about the spread of the highly infectious Delta virus variant have dragged sentiment to a time when markets are still on edge following the Fed's shocker move earlier in the month.Australia is experiencing small, but rapidly growing outbreaks. Snap lockdowns are being implemented in many cities. Indonesia is also struggling with record-high numbers. Malaysia will be extending a lockdown, and Thailand has announced new restrictions.Ray Attrill Head of FX Strategy, National Australia Bank in Sydney said that markets are "really treading water" ahead of U.S. labor data later in the week."We have a quarter and a month end, and here in Australia a financial year ending tomorrow. Markets don't want to take a particularly strong stance on things."Friday's closely watched U.S. employment report for June will be published. This could influence the Fed's policy outlook, and possibly lead to increased expectations for interest rates.Attrill stated that "Inflation has already been much higher than the Fed anticipated, so it's really the pace for improvement in the labor market that is most important in terms of when Fed will feel comfortable signalling tapering."Overnight, risk appetite was boosted by news of a possible bipartisan U.S. Infrastructure spending agreement.Wall Street saw the Nasdaq rise 0.98% and S&P 500 climb 0.23% to reach all-time highs Monday. This was due to tech stocks, as investors bet on strong earnings seasons.Nvidia Corp, Netflix Inc, Twitter Inc, and Facebook Inc were some of the top tech companies, helping to sustain momentum for the S&P 500 after Friday's best weekly performance in 20 years. The Dow Jones Industrial Average declined 0.44 and cyclical sector performance was affected by fears about the rise in COVID-19-related cases across Asia.The U.S. dollar held steady in currency markets as investors remained on the sidelines before Friday's jobs report.Investors will also be looking at U.S. consumer sentiment data on Tuesday and the Institute for Supply Management's manufacturing indicator on Thursday for clues about where interest rates are heading.The safe-haven demand resulting from concerns about the spread of the Delta virus strain has benefited both the dollar and the yen.The greenback held steady at 110.46 yen against the Japanese yen and $1.192 against the euro.The yields on benchmark 10-year U.S. Treasuries were also steady at 1.483Brent crude oil was $0.28 lower at $74.43 per barrel. U.S. crude oil was $0.18 or 0.25% lower at $72.73 per barrel. Spot gold was unchanged at $1,777.12 an ounce by 01/33 GMT
