San Francisco Frontiers - Asian markets climb as calm returns after sharp sell-off

While there was no catalyst from Wall Street owing to a public holiday, a healthy performance across Europe provided a little boost, while bargain-buying was also lending support.

However, there remains an overarching sense of gloom as traders speculate that the sharp lift in borrowing costs around the world will tip economies into recession.

Focus this week is on Federal Reserve boss Jerome Powell's two days of testimony to lawmakers in Washington, which will be closely watched for some insight into the bank's thinking and possible clues about its plans for fighting surging prices.

The Fed announced a three-quarter point lift last week, after inflation data days earlier had smashed forecasts and hit a four-decade high.

"While (investors do) not expect Powell to reinvent the policy wheel, we could expect him to reinforce the idea that the Fed is in data-dependent mode," said Stephen Innes of SPI Asset Management.

"Hence, any shift in Fed rhetoric will be a function of incoming data, virtually all of which now presents event risk. From that perspective, further evidence of persistent inflation will trigger policy panic, while any signs of sluggish growth momentum will confirm the recession narrative.

"Neither suggests that now is the time to board the rally wagon."

In early trade, Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Wellington, Taipei, Manila and Jakarta all rose.

"There might be a narrative that we've hit a bottom, we are oversold, the Fed is taking inflation seriously and that might be slightly bullish in the interim," Frances Stacy, of Optimal Capital, told Bloomberg TV.

However, while the volatility of last week has gone, banks' intention to continue hiking rates could cause fresh ructions.

Several officials -- including at the Fed, Bank of England, Reserve Bank of Australia and European Central Bank -- have come out in recent days to flag a further tightening of borrowing costs.

In commodities markets, oil extended gains as traders moved back in after Friday's plunge fuelled by concerns over a possible recession.

The gains have been helped by optimism for a boost to demand as China gradually eases out of its period of Covid containment, while the US summer driving period picks up.

- Key figures at around 0230 GMT -

Tokyo - Nikkei 225: UP 1.8 percent at 26,225.15 (break)

Hong Kong - Hang Seng Index: UP 1.1 percent at 21,392.60

Shanghai - Composite: UP 0.1 percent at 3,319.07

Euro/dollar: UP at $1.0534 from $1.0528 Monday

Pound/dollar: UP at $1.2269 from $1.2243

Euro/pound: DOWN at 85.86 pence from 86.02 pence

Dollar/yen: UP at 135.10 yen from 135.06 yen

West Texas Intermediate: UP 2.2 percent at $112.012

Brent North Sea crude: UP 1.6 percent at $115.91 per barrel

London - FTSE 100: UP 1.5 percent at 7,121.81 points (close)

New York - Dow: DOWN 0.1 percent at 29,888.78 (close)

W.Thompson--SFF