HONG KONG - Most Asian equities rose with the yen on Monday after US Federal Reserve boss Jerome Powell said "the time has come" to start cutting interest rates, lining up the central bank for a move as soon as next month.
The comments provided investors with an extra boost and helped put the market turmoil earlier in August behind them, though analysts warned to be on guard for any unexpected data that could burst the optimistic bubble.
Traders were also keeping an eye on developments in the Middle East after a flare-up in hostilities between Israel and Hezbollah that fanned fears of an escalation in the region.
Equities had already been on the rise on expectations the Fed would start cutting from two-decade highs next month, with debate now mostly centred on how big the reduction would be and how many more would follow.
Traders are betting on around one percentage point of reductions before the end of the year.
Most of Asia followed suit on Monday, with Hong Kong, Sydney, Singapore, Taipei and Wellington all in the green.
However, there were losses in Tokyo, Shanghai and Seoul.
Attention will now turn to the release of a string of economic figures, including US jobs, inflation and personal income.
Tokyo stocks were weighed by a strengthening yen, which rallied Friday on Powell's comments and an indication from Bank of Japan chief Kazuo Ueda that it could hike rates again if inflation and the economy performed as expected.
The yen was sitting at less than 144 per dollar in early trade.