Crude pared its gain to around 1% after surging as high as 4.6% on Saudi Arabia’s pledge to make an extra 1 million barrel-a-day reduction in July, which trims the country’s production to the lowest level for several years.

Stock benchmarks in Japan and Australia advanced more than 1% on Monday while South Korea’s Kospi rose about 0.5%. Shares in Hong Kong climbed back up, along with Shanghai’s main index, following the release of the Caixin’s services purchasing managers’ index, which showed improvement in activities in May.

Contracts for the S&P 500 were marginally lower in Asia after further gains on Friday took the underlying measure to the cusp of a bull market. An MSCI Inc. gauge of equities across developed and emerging markets is at the highest since May last year, despite increasing worries about an economic slowdown in China and the prospect of higher interest rates in the US. 

Gains in the US on Friday were fuelled by big tech, options positioning and bets for a Fed to hold rates unchanged this month, before a likely increase in July.

A mixed jobs report shaped the wagers on the Fed, with signs of labor-market slackening in May despite a pickup in hiring. That bolstered the argument from Fed chair Jerome Powell and other officials that they should take more time to assess incoming data and the evolving outlook before raising rates again.

Two-year Treasury yields, which are more sensitive to imminent central bank moves, rose four basis points, adding to an increase of 16 basis points on Friday. Australia’s three-year government bond yields jumped about 11 basis points following the move in Treasuries and ahead of a central bank rates decision on Tuesday.

A gauge of dollar strength was fractionally higher, in part reflecting rising US yields. The euro, the pound and the Australian dollar moved lower while the yen weakened past 140 versus the greenback. 

Meanwhile, Morgan Stanley sees the possibility of a 16% profit drop for the S&P 500 this year that would slam the brakes on a US equity rally. The prediction is one of the most bearish among those tracked by Bloomberg, and contrasts with bullish forecasts from the likes of Goldman Sachs Group Inc., which anticipates mild growth. DM