Asian markets rose on Monday but investors remained cautious after a forecast-beating US jobs report reinforced optimism about the economic recovery but fanned speculation the Federal Reserve could begin tapering monetary policy this year.

Spiking infections around the world from the Delta COVID variant are also jangling nerves as governments reassess their growth outlooks with some – including China – forced to reimpose lockdowns and other containment measures.

Data on Friday showed the world’s biggest economy created 943,000 new jobs in July, while the June reading was also revised higher to more than 900,000. The news provided some much-needed reassurance that the rebound was still on track despite Delta’s spread.

However, it also renewed concerns that in a bid to prevent overheating, the Fed will start to wind down the ultra-loose policies – including record low interest rates and a vast bond-buying scheme – that have been integral to an equity market rally since April last year.

The bank has continuously stressed that it will maintain its accommodative stance for as long as the economy needs to recover but with inflation at multi-year highs and jobs returning, it is coming under increasing pressure to act. 

“You have these concerns that if the economy is growing very, very strongly then that might bring forward the tightening or the tapering by the Fed,” Shane Oliver, at AMP Capital, told Bloomberg Television. “There is a good chance they might announce that tapering in September and it would start later this year.”

And National Australia Bank’s Rodrigo Catril added: “Overall, there is not a lot of disagreement on a taper announcement coming sometime between September-December followed by actual tapering sometime between November and January.” He said Fed chief Jerome Powell’s speech to the Jackson Hole symposium of top finance and banking chiefs this month had taken on even more significance.

Overall, there is not a lot of disagreement on a taper announcement coming sometime between September-December followed by actual tapering sometime between November and January- Rodrigo Catril of National Australia Bank

Still, US investors were broadly upbeat, with the Dow and S&P 500 ending at all-time highs, though the Nasdaq slipped with tech firms more sensitive to higher rates. And Asian investors took up the baton. Hong Kong, Shanghai, Sydney, Seoul, Wellington, Manila and Jakarta all rose, though Taipei slipped. Tokyo and Singapore were closed for holidays.

There was little major reaction to data showing growth in Chinese exports slowed last month, while inflation came in slightly above expectations.

However, oil prices extended Friday’s losses as the fast spread of Delta raises concerns about the outlook for demand, particularly in China.