MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.9 percent, led by a decline of as much as 3.8 percent in Korean shares. S&P 500 e-mini futures edged up 0.1 percent, while Japanese markets are closed for a holiday.

"Tuesday will be nothing more than the day ahead of a much bigger day," ING analysts wrote in a note. By tomorrow, the market will have guidance on the midterm implications and the US Treasury's quarterly refunding announcement, they wrote. The yield on the US 10-year Treasury bond was up 2.1 basis points at 4.9 percent.

Overnight, stocks on Wall Street edged lower, with the S&P 500 slipping 0.5 percent as tech sector earnings weighed on investor confidence, even as data showed US manufacturing activity picked up in October amid strong domestic demand.

Apple shares extended losses, falling 2.8 percent in after-hours trading after the iPhone maker on Monday forecast lower gross margins for the crucial holiday quarter, citing rising memory-chip costs, and projected services revenue growth that fell well short of Wall Street expectations.

Investors are also preparing to vote in the US midterm elections, where President Donald Trump's Republican Party is facing a challenge to keep its hold on Congress.

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Opinion polls favor the Democrats to win the House, though the Senate remains too close to call. Prediction market sites Polymarket and Kalshi currently assign around a 75 percent probability that the Democrats will control the Senate.

"Prediction markets imply the greatest likelihood of a Democratic 'sweep', but polling margins remain broadly comparable to Trump 1.0 midterms in 2018 when Democrats won the House decisively, but Republicans held onto the Senate," MUFG analysts wrote in a note.

"Brazil’s election surprise is a reminder that prediction markets can misprice political tail risks, raising questions around the roughly 70 percent odds now assigned to a blue 'sweep' in the midterms."

Crude stabilizes

Oil prices steadied after a fall, with Brent crude fluctuating between gains and losses and last 0.1 percent lower at US$104.72 as trading resumed in Asia and investors weighed the state of peace talks between the US and Iran. The Wall Street Journal on Monday reported the US military struck Iran's Qeshm Island in the Strait of Hormuz, citing US officials.

Crude prices fell more than 7 percent on Monday as talks between Iranian and Qatari officials lifted hopes for an end to the US-Israeli war with Iran and stabilization of Middle East crude supply. "Oil prices fell sharply as renewed hopes for US-Iran diplomacy saw some geopolitical risk premium unwind," Westpac analysts wrote.

In Asia-Pacific, Australian shares were up 0.1 percent and the Aussie dollar held steady at $0.70 ahead of the latest decision from the Reserve Bank of Australia, at which the central bank is widely expected to hike its cash rate target by 25 basis points to a near two-decade high of 4.85 percent from the current 4.6 percent.

Taiwanese shares fell 1.3 percent, while in Hong Kong, the Hang Seng Index was up 0.3 percent.

Against the Chinese yuan, the US dollar was 0.3 percent stronger at 6.66 yuan in offshore trade after the People’s Bank of China said on Tuesday it would raise the foreign exchange deposit reserve ratio for financial institutions to 6 percent from 4 percent from Nov. 15.

The US dollar index, which measures the greenback's strength against a basket of six currencies, edged up 0.1 percent to 101.81, recovering from a one-month low after slipping 0.2 percent on Monday.

Cryptocurrencies remained choppy after last week's Binance hack, as customers withdrew a net $4.72 billion of funds. Bitcoin crawled 0.5 percent higher to $77,112.18 and ether nudged 0.1 percent lower to $2,253.59.

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