HONG KONG, CHINA — Asian markets were mixed in holiday-thinned trade Monday, while the dollar dropped as investors lowered their expectations for US interest rate hikes.

Tokyo was the standout performer, rallying more than one percent following a blockbuster performance on Wall Street, where all three main indexes enjoyed a strong end to last week thanks to a tech rally.

Comments from top Federal Reserve officials provided support to equities after they indicated the bank could lift rates at a much slower pace as inflation gradually comes down.

Governor Christopher Waller said he was open to a 25-basis-point lift at the next policy meeting, though he did point out that the market’s view on inflation was “very optimistic”.

Meanwhile, Philadelphia Fed boss Patrick Harker again called for slower increases.

And Kansas City boss Esther George said she was optimistic the world’s top economy could still achieve a soft landing, despite worries that a series of big rate hikes last year would tip it into recession.

Adding to the positive mood is China’s re-emergence from years of zero-Covid measures that essentially cut the country off from the rest of the world, hammering growth.

With most of the region closed for the Lunar New Year holiday, trading was thin.

Still, Tokyo led gains, while Sydney and Mumbai were also in positive territory.

However, there were small losses in Manila, Bangkok and Wellington.

“Although most Asian markets are closed for Chinese Lunar New Year celebrations, Japanese and Australian stocks are picking up on the better mood from US investors and on expectations of China’s economy returning to some semblance of a pre-pandemic trend,” said SPI Asset Management’s Stephen Innes.

Lower expectations for US interest rates weighed on the dollar against its major peers, while oil prices were flat after last week hitting their highest levels since November.

Key figures around 0605 GMT 

Tokyo – Nikkei 225: UP 1.3 percent at 26,906.04 (close)

Hong Kong – Hang Seng Index: Closed for a holiday

Shanghai – Composite: Closed for a holiday

Dollar/yen: DOWN at 129.45 yen from 129.51 yen on Friday

Euro/dollar: UP at $1.0892 from $1.0861

Pound/dollar: UP at $1.2413 from $1.2404

Euro/pound: UP at 87.73 pence from 87.52 pence

West Texas Intermediate: FLAT at $81.65 a barrel

Brent North Sea crude: FLAT at $87.63 a barrel

New York – Dow: UP 1.0 percent at 33,375.49 (close)

London – FTSE 100: UP 0.3 percent at 7,770.59 (close)