Asia's emerging stock and currency markets were trending lower on Monday in holiday-thinned trade as strong US jobs data raised worries the Federal Reserve may hike interest rates sooner than it has indicated.
Indian shares fell the most, down 0.8%, as the number of new daily Covid-19 cases surpassed 100,000 for the first time, while in Indonesia losses added up to less than half a percent.
Markets in Australia, Hong Kong, Taiwan and Asian powerhouse China were closed.
"With Europe on holiday today, volumes will rapidly taper this afternoon in Asia," said Jeffrey Halley, a senior Asia Pacific market analyst at OANDA.
The dollar was steady on Monday and 10-year Treasury yields were off last week's 14-month peak even as the US economy created more jobs than expected in March. Reaction to the data on Friday was scant.
The prospects of a return to a full employment is raising questions about whether the Fed can stick to its pledge to keep interest rates steady through 2023. The market has fully priced in one rate hike by the end of next year.
A rate hike could narrow the rate differential between Asia's high-yielders and US Treasuries. Minutes of the Fed's March meeting will be release on Wednesday.
The rupiah was 0.1% firmer on the dollar, with benchmark 10-year bond yields at their lowest level in around three weeks.
In comments late on Thursday, a senior Bank Indonesia deputy governor said the central bank has room to cut its key policy rates due to low inflation, which slowed in March to 1.37%, the lowest annual rate since August.
Bank Indonesia left its key policy rate at a record low of 3.50% last month to starve off capital outflows and protect the rupiah, which fell around 2% in March.
In India, the rapid rise in Covid-19 infections has sparked concerns states may impose further restrictions that could harm the country's economic recovery.
The Reserve Bank of India (RBI) ends its two-day meeting on Wednesday. Analysts at Barclays expect the market to focus on the RBI's guidance, given rates are likely to be left unchanged.
"A relatively dovish guidance and/or OMO (open market operation) purchases/twist operations could trigger a rally in fixed income markets," the Barclays analysts said.