By Jamie McGeever

A look at the day ahead in Asian markets from Jamie McGeever.

Creeping optimism that a deal will be reached over the U.S. debt ceiling standoff looks to be just about enough to sustain investors' risk appetite, although Asian markets on Tuesday could be vulnerable to a reversal.

Flash purchasing managers index surveys from Australia and Japan will be released on Tuesday. Service sector activity in both countries has been pretty steady in recent months, but factory activity has been shrinking.

Any sign of deterioration could be the excuse investors need to take some profit from the recent rally in stocks and risk assets, especially in Japan.

Japanese stocks are on a roll. The Nikkei last week joined the broader Topix index and hit a new 33-year peak, closing on Monday above 31,000 points for the first time since August 1990.

The index has had only five down days in the last 29 trading sessions, and is up 10% in three weeks. This has coincided with the yen's slide to its 2023 lows - the cheaper currency making it more tempting for foreign investors to buy Japanese assets.

A pause for breath in both markets would not come as a major surprise. Similarly, might the dollar be due for a correction?

U.S.-China relations took a turn for the worse, meanwhile, after Beijing late on Sunday banned U.S.-based Micron Technology Inc selling its memory chips to key domestic industries.

China's cyberspace regulator said that Micron, the biggest U.S. memory chipmaker, had failed its network security review and that it would block operators of key infrastructure from buying from the company.

This comes as G7 leaders say they will "de-risk" without "decoupling" from China in response to what they call Beijing's "economic coercion", reducing exposure to the world's second-largest economy in everything from chips to minerals.

Micron's loss could be their Chinese and South Korean rivals' gains, however, as Chinese mainland firms seek memory products from other sources.

Chinese stock markets go into Tuesday on the back of a rare solid gain on Monday although the yuan remains under heavy selling pressure, trading for a third straight day through the 7.00 per dollar level.

All of this might be moot, however, if Democrats and Republicans in Washington reach agreement on the $31.4 trillion debt limit impasse. Top congressional Republican Kevin McCarthy said talks are "on the right path" and the deal being worked on could be acceptable to his colleagues.

But Treasury Secretary Janet Yellen again warned late on Monday that it is "highly likely" that Treasury runs out of cash by June 1, opening up the potential for the first-ever U.S. default.

Treasury said on Monday that, as of Friday, it had $60 billion left.

Here are three key developments that could provide more direction to markets on Tuesday:

- Japan flash PMIs (May)

- Australia flash PMIs (May

- South Korea consumer sentiment (May)

(By Jamie McGeever)