Asian markets advanced Monday after Federal Reserve chief Jerome Powell said officials would take a careful approach to rate hikes, while Chinese shares soared after the government cut the duty on trades.
In a much-anticipated speech Friday, the US central bank boss left the door open to more tightening but repeated his pledge that decision-making would be data-dependent as policymakers try to bring inflation to heel.
Powell's comments suggested borrowing costs would be held at a 22-year high of 5.25-5.5 per cent next month, though investors remain concerned more could come before year's end.
While inflation is coming down, markets have been hit in recent weeks by a strong run of economic data — particularly on jobs — that has been seen as putting pressure on the Fed to keep hiking interest rates.
"If the data continues to show an ease in labour market tightness and price pressures, then the Fed is likely done with its tightening cycle," said National Australia Bank's Rodrigo Catril.
"If the data doesn't play ball, then further tightening should be expected. Thus, upcoming key market data releases (inflation and labour market) are likely to set the tone for markets over coming months."
Analysts said the focus on data meant this week's inflation and jobs figures take on even more significance.
The remarks sent US stocks lower initially before they bounced back to end Friday on a positive note.
And Asia followed suit Monday, with Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Seoul, Taipei, Mumbai, Bangkok, Jakarta and Wellington all enjoying a strong start to the week.
Paris and Frankfurt both rose in the morning. London was closed for a holiday.
Shanghai was boosted by China's decision to slash the tax paid on stock trades for the first time since 2008 as authorities battle to support the world's second-largest economy.
The Ministry of Finance and its State Taxation Administration said in a joint statement the move was designed to "invigorate the capital market and boost investor confidence".
Officials also said they would slow the pace of new listings, which usually suck up market liquidity.
Positive signal
The measures provided some joy among traders and come as Chinese leaders struggle to kickstart the stuttering economy, with a series of pledges failing to lift optimism.
"The scale, force and speed of the measures all beat expectations," said analysts at China International Capital Corp.
"The increasing force of the policy tools will lift market confidence, amplifying the positive signal for the market."
However, the gains in China were well off their initial five per cent advance owing to ongoing worries about the economy.
Neo Wang at Evercore ISI warned that stocks were unlikely to rally unless authorities announce a huge stimulus package similar to the so-called "bazooka" in 2008.
Investors are also keeping tabs on US Commerce Secretary Gina Raimondo's talks with Chinese counterparts in the latest bid to ease trade tensions between the world's two largest economies.
Raimondo's visit -- which will last until Wednesday — is the latest in a series of high-level trips to China by US officials in recent months and could culminate in a meeting between presidents Joe Biden and Xi Jinping.
Hong Kong also saw the restart of trading in troubled Chinese property giant Evergrande after a 17-month suspension for not publishing its financial results.
The firm collapsed more than 80 per cent in the morning, having finally released its earnings Sunday, showing losses of $4.53 billion in the first half of the year and just $556 million in cash assets.
Once China's largest real estate firm, Evergrande defaulted in 2021 and is saddled with more than $300 billion in liabilities, becoming a symbol of a nationwide property crisis that many fear could spill over globally.
