(Bloomberg) — Asian shares rose, extending a rally in global equities to a third day, as improving economic data fueled optimism central banks will avoid bringing on a recession while quelling inflation.

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Stock benchmarks in Japan and Australia both advanced more than 1%, while South Korea’s rose about 0.5%. Shares in Hong Kong pared an earlier advance. Shares rallied after China’s Caixin’s services purchasing managers’ index showed a jump in activity in May.

Oil trimmed gains to around 1% after surging as much as 4.6% on Saudi Arabia’s pledge to make an extra 1 million barrel-a-day reduction in July. Asian energy shares rose.

S&P 500 futures edged lower in Asia after Friday’s US payroll data helped take the underlying measure to the cusp of a bull market. An MSCI Inc. gauge of equities across developed and emerging markets is heading for its highest close since May last year, despite concern about an economic slowdown in China and the prospect of higher US interest rates.

Two-year Treasury yields rose four basis points, after jumping 16 basis points on Friday. Australia’s three-year yields climbed 12 basis points. That came after the move in Treasuries and ahead of a central bank rates decision Tuesday.

“The surge in US payrolls has stoked another leg higher in US yields and reinforced the Fed’s preferred view that a resilient economy means a steady hand in June is a likely rate-hike ‘skip’ rather than an extended pause,” said Sean Callow, senior currency strategist at Westpac Banking Corp. “The previously enthusiastic forecasters of a US recession have gone a bit quiet.”

Gains in US stocks Friday were fueled by big tech, options positioning and bets for a Fed to keep rates unchanged this month, before a likely increase in July.

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The jobs report shaped 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.

“The question is, is June is really a coin flip at this point?” Nancy Davis, founder of Quadratic Capital Management, said on Bloomberg Television, referring to the Fed’s June meeting. “With this jobs number, it’s harder for the Fed to pause, but I do think the Fed can also turn around and use their balance sheet more to help solve the inflation problem.”

The dollar strengthened against all its Group-of-10 peers, in part reflecting rising US yields. The yen weakened back past 140 to the US currency.

Asset managers joined hedge funds in increasing yen-short positions amid speculation the Bank of Japan isn’t likely to rush to adjust its ultra-easy monetary policy. They boosted bearish bets to the most so far for 2023 in the five days through May 30, Commodity Futures Trading Commission data show.

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.

Key events this week:

• Eurozone S&P Global Eurozone Services PMI, PPI, Monday

• US factory orders, ISM services, Monday

• ECB President Christine Lagarde appears in European Parliament, Monday

• Rate decisions in Australia, Poland, Tuesday

• China forex reserves, trade, Wednesday

• US trade, consumer credit, Wednesday

• Canada rate decision, Wednesday

• EIA crude oil inventory data, Wednesday

• Eurozone GDP, Thursday

• Rate decisions in India, Peru, Thursday

• Japan GDP, Thursday

• US wholesale inventories, initial jobless claims, Thursday

• China PPI, CPI, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.1% of 6:30 a.m. London time. The S&P 500 rose 1.4% Friday

• Nasdaq 100 futures fell 0.4%. The Nasdaq 100 rose 0.7%

• Euro Stoxx 50 futures fell 0.2%

• Japan’s Topix Index rose 1.6%

• Hong Kong’s Hang Seng Index was little changed

• China’s Shanghai Composite Index fell 0.1%

• Australia’s S&P/ASX 200 Index rose 0.9%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro fell 0.1% to $1.0696

• The Japanese yen fell 0.1% to 140.06 per dollar

• The offshore yuan fell 0.2% to 7.1220 per dollar

• The Australian dollar fell 0.1% to $0.6602

• The British pound fell 0.2% to $1.2429

Cryptocurrencies

• Bitcoin fell 1.6% to $26,818.69

• Ether fell 1.8% to $1,869.52

Bonds

• The yield on 10-year Treasuries advanced three basis points to 3.72%

• Japan’s 10-year yield advanced 2.5 basis points to 0.435%

• Australia’s 10-year yield advanced 12 basis points to 3.76%

Commodities

• West Texas Intermediate crude rose 1.2% to $72.62 a barrel

• Spot gold fell 0.2% to $1,944.30 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Hooyeon Kim.

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