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Asian shares fell on Tuesday as investors pondered the prospect of a Trump victory and what that would mean for China, while the dollar climbed for a second day even though dovish Fed comments fuelled bets of more U.S. rate cuts this year.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5%, having eased 0.3% on Monday. Japan returned from a public holiday, with the Nikkei index up 0.4%.

Overnight, investors continued to digest the fallout from the attempted assassination on Saturday of former U.S. President Donald Trump, who is favourite to win the White House in November and who on Monday nominated his vice presidential running mate J.D. Vance.

Wall Street closed higher, with the Dow Jones notching an all-time closing high thanks to energy and banking shares. Bitcoin jumped 6%, gold climbed towards a record high and the yield curve steepened as investors favoured so called Trump-victory trades.

"J.D. Vance sits in the camp of taking China on head-first in a bid for improved trade deals for the U.S., and this will only weigh on sentiment towards China, where we saw better selling in China equity yesterday," said Chris Weston, head of research at Pepperstone.

The Shanghai Composite index fell 0.3%, while Hong Kong's Hang Seng index lost 1.4%, having already dropped 1.5% the day before soft economic data from China heightened the risk that Beijing could miss its 5% growth target this year, barring forceful stimulus.

Also cheering Wall Street, Fed Chair Jerome Powell said on Monday the three U.S. inflation readings over the second quarter do "add somewhat to confidence" that inflation is returning to the Fed's target in a sustainable fashion.

Markets have now fully priced in a quarter-point rate cut from the Fed in September, with a total easing of 68 basis points expected by the end of the year.

That kept a lid on the U.S. dollar overnight, although it has attracted buying interest as some investors bet on a Trump victory. The dollar index firmed 0.1% on Tuesday against a basket of major currencies to 104.34.

It rose 0.3% on the Japanese yen to 158.55 per dollar, which is struggling to hold onto the gains after Tokyo's suspected intervention in the market last week.

"I actually have bought dollars here. I think the U.S. dollar has probably bottomed for now," said Tony Sycamore, analyst at IG. "We've had the reaction out of the soft CPI data and the dovish Powell. And I think the risks to the dollar to the upside here."

"The idea the Trump administration is more likely to get to the White House and increase tariffs on China, that's not a good thing at all for Chinese stocks. Put that together with the higher U.S. dollar and higher yields, I think it's going to be a tough time for Hang Seng."

Long-term Treasuries found their footing in Asia, with the 10-year yield off 1.5 basis points to 4.2138%, having risen four basis points overnight.

In commodity markets, gold rose 0.2% to $2,426.18 an ounce, nearing a two-month high. [GOL/]

Oil prices ticked down on worries about a slowing Chinese economy crimping demand. [O/R]

Brent futures fell 0.2% to $84.72 a barrel, while U.S. West Texas Intermediate (WTI) crude also slipped 0.2% to $81.77.