HONG KONG - Asian equities rose in holiday-thinned trade after US jobs data indicated the Federal Reserve would likely have to hike interest rates again but soothed recent worries about a possible recession.
The closely watched non-farm payrolls reading on Friday followed a string of figures last week showing the world's top economy was slowing down and dented investor sentiment.
Focus is now on the release of inflation figures later this week, which will play a crucial role in the Fed's decision-making when it meets early next month.
While rates are seen going up, bets are for officials to end their hiking cycle earlier than previously thought, with a nervous eye on the banking sector after last month's turmoil that saw two lenders go under and Credit Suisse taken over.
Some commentators have even suggested the Fed would announce cuts by the end of the year.
"It seems the Fed will unlikely 'budge' on cuts unless the US economy is amid a deep downturn," said SPI Asset Management's Stephen Innes.
"And given the still sticky inflation outlook and the less dovish drumbeat from the Fed speak, cuts may need to be removed from the market unless we enter an actual recession -- and of course, neither outcome is an excellent backdrop for equities."
He added that the jobs report "was encouraging, signalling a subtle rebalancing of the labour market that again points to a soft landing".
With much of the region still closed for the Easter break, trading was light again on Monday.
Tokyo, Shanghai, Seoul, Singapore and Taipei rose but Jakarta inched down.
Expectations for another Fed hike also lifted the dollar against its peers.
Oil prices edged up as investors weighed OPEC's decision to cut output by more than a million barrels a day with the outlook for the global economy and the impact on demand.
"Economic data will form a key input this week for energy markets," said Charu Chanana, at Saxo Capital Markets.
"Given that the OPEC decision was partly intended to drive out short sellers from the crude oil market, oil prices may be better able to reflect market fundamentals."