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Asian share markets were mildly weaker on Tuesday as global investors consider the prospect the U.S. economy's 'exceptionalism' is starting to unwind as manufacturing activity in the world's largest economy further weakened.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1%, after U.S. stocks ended the previous session with mild gains. The index is up 1.6% so far this month.

Australian shares were down 0.21%, while Japan's Nikkei stock index slid 0.77%.

Hong Kong's Hang Seng Index was flat in early trade and China's CSI300 Index off 0.16%.

The yield on benchmark 10-year Treasury notes reached 4.4001% compared with its U.S. close of 4.402% on Monday. The two-year yield, which rises with traders' expectations of higher Fed fund rates, touched 4.8184% compared with a U.S. close of 4.818%.

On Monday, U.S. Treasury yields fell to the lowest point in two weeks, after the country's manufacturing activity slipped for the second consecutive month in May.

The 2-year yield was 6 basis points lower while the 10-year yield was down 11 basis points.

"The sharper move at the long-end is a sign that weaker manufacturing data is unlikely to shift the dial on Fed rate cuts near term, but is perhaps a signal of the market's view of neutral interest rates as US economic exceptionalism fades," Westpac economist Jameson Coombs said in a note on Tuesday.

There was now 40 basis points of rate cuts by the end of 2024 priced into financial markets expectations, he added.

In Europe, investors expect the European Central Bank on Thursday to cut the benchmark rate by 25 basis points to 3.75%.

On Wall Street, the S&P 500 index edged up 0.1%, the Dow Jones Industrial Average shed 0.3%, and the Nasdaq Composite rose 0.6%.

In India, Prime Minister Narendra Modi is expected to win a record-equalling third consecutive term in office on Tuesday when the 642 million votes cast in the world's largest election are counted.

The outcome is expected to be positive for the country's financial markets, according to analysts, on the hope India will under further economic reform.

The dollar rose 0.16% against the yen to 156.35 in Asian trading on Tuesday. It is still some distance from its high this year of 160.03 in late April.

The European single currency was up 0.1% on the day at $1.0912, having gained 0.65% in a month, while the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was down at 104.

U.S. crude dipped 0.42% to $73.91 a barrel. Brent crude fell to $78.05 per barrel. Both benchmarks slid to four-month lows on Monday after the Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, agreed to start unwinding some production cuts from October.

"Most commodity analysts had expected the production cuts to be maintained till the end of the year," NAB economists said.

Gold was slightly higher. Spot gold was traded at $2350.7266 per ounce. [GOL/]