HONG KONG, Feb 7 — Asian markets fluctuated today as a forecast-busting US jobs report reinforced optimism that the world’s top economy was well on the recovery track, but also ramped up expectations of an interest rate hike.

The much-anticipated non-farm payrolls data on Friday saw the Labour Department sharply revise up the previous three months’ readings, while also revealing a wage growth surge.

With all-important reports this week tipped to show inflation rising at a pace not seen for four decades, traders are becoming increasingly anguished about the US central bank’s plans to bring prices under control while being careful not to jeopardise the recovery.

There is mounting talk that officials will have to hike borrowing costs at least four times this year — with some predicting as many as seven rises could be on the cards.

The move to tighter policies, which is likely to start in March, will bring an end to the era of ultra-cheap cash that has helped fuel a near two-year markets rally. And that has been acting as a hefty weight on stocks at the start of the year.

The Federal Reserve is in a difficult spot, “trying to manage the real economy where we see that hot inflation and the financial economy, which quivers every time we talk about rate rises”, Karen Harris, of Bain & Co, told Bloomberg Television.

With the jobs reading showing the economy remained resilient in the face of the Omicron coronavirus variant, supply chain snarls and surging prices, Wall Street mostly rose, helped by a thumping rise in Amazon.

The S&P 500 and Nasdaq closed on a positive note, though the Dow dipped.

Asia was mixed. Shanghai led the gainers as investors returned from their week-long Lunar New Year break to play catch-up with a broadly strong week across world markets, while Singapore, Taipei, Bangkok and Jakarta were also in positive territory.

Hong Kong finished marginally higher thanks to a late-afternoon rally from negative territory, following a three-per cent surge Friday.

Tokyo, Seoul, Mumbai and Manila closed down.

Sydney was also in the red despite news that Australia will open its borders to tourists this month, ending almost two years of tough restrictions. The announcement helped Qantas surge more than four per cent.

London, Paris and Frankfurt all rose in opening business.

Oil edged down after another surge, but expectations demand will continue to improve as the world economy reopens is supporting prices, with a cold snap in the United States and ongoing uncertainty over the Russia-Ukraine stand-off feeding expectations to the upside.

Brent briefly hit US$94 (RM393) for the first time since October 2014 before dipping back, but analysts have predicted the contract, as well as West Texas Intermediate, could top US$100 soon. Still, signs of a breakthrough in Iran nuclear talks could help staunch the surge, observers said.

“Demand for petrol-based products is soaring, while OPEC and US shale supply remain constrained,” Stephen Innes, of SPI Asset Management, said.

“Having Iran back in the supply mix would have a significant and lasting impact on oil prices. It would likely stop the soaring price rally.”

Key figures around 0820 GMT

Tokyo — Nikkei 225: DOWN 0.7 per cent at 27,248.87 (close)

Hong Kong — Hang Seng Index: FLAT at 24,579.55 (close)

Shanghai — Composite: UP 2.0 per cent at 3,429.58 (close)

London — FTSE 100: UP 0.5 per cent at 7,556.96

West Texas Intermediate: DOWN 0.7 per cent at US$91.70 per barrel 

Brent North Sea crude: DOWN 0.1 per cent at US$93.15 per barrel

Euro/dollar: DOWN at US$1.1437 from US$1.1453 late Friday

Pound/dollar: UP at US$1.3547 from US$1.3527

Euro/pound: DOWN at 84.41 pence from 84.65 pence

Dollar/yen: UP at 115.22 yen from 115.21 yen

New York — Dow: DOWN 0.1 per cent at 35,089.74 (close) — AFP