Asia shares bounce, others cautious as oil rises

Asian shares experienced a rally on Monday, September 7, as the strong US jobs report was viewed positively for global growth, despite the likelihood of an interest rate increase. Oil prices also saw a slight increase following the US and Iran's attacks on each other's ships in the Gulf. Tehran announced plans to create a restricted zone outside the Strait of Hormuz in the coming days.

The US crude rose to US$91.85 a barrel, while Brent climbed to US$96.45 a barrel. This inflationary effect adds pressure to a crucial US consumer price reading this week, contributing to the European Central Bank's expected rate hike to 2.75 per cent on Thursday. Futures suggest a 75 per cent probability of an additional rate hike to 3.0 per cent by December.

European stocks, however, remained cautious due to the potential for hawkish guidance from the ECB. On Wall Street, the light trading volume on a US holiday kept both S&P 500 and Nasdaq futures slightly lower. This week's focus will be on the US August CPI report, with median forecasts predicting a 0.2 per cent increase in the core.

Central banks are demonstrating patience amidst the energy shock, potentially leading to further rate hikes from the ECB, BoJ, and the Fed before the year ends.