HONG KONG, CHINA — Asian markets squeezed out gains Tuesday, giving investors some relief from a recent sell-off fuelled by worries that US interest rates will go higher than feared following last week’s blockbuster jobs report.

January’s rally has come to a halt this month as investors contemplate an extended period of high borrowing costs aimed at bringing down inflation from multi-decade highs.

While there are signs that price rises are slowing, and the Federal Reserve acknowledged progress in its battle last week, the employment data Friday was seen as a body blow for many.

The reading, which showed more than half a million new posts created in January, led to speculation the Fed could have to unveil even more rate hikes this year, while any chance of a cut before 2024 all but evaporated.

Focus is now on a planned speech later in the day by central bank boss Jerome Powell, with observers looking for any change from his less hawkish comments after last week’s policy decision.

“Powell remains a big wild card every time he speaks,” said Chris Senyek at Wolfe Research. “Investors will be looking to see if he ‘walks back’ his very dovish tone from last Wednesday, particularly with respect to financial conditions and the US ‘disinflationary process’. We still believe that the Fed will be ‘higher for longer’.”

Atlanta Fed president Raphael Bostic warned Monday that if the economy continues to show strength, “it’ll probably mean we have to do a little more work”.

He told Bloomberg News: “I would expect that that would translate into us raising interest rates more than I have projected right now.”

He said he had seen rates topping out at 5.1 percent but added that the final figure could be even higher.

Still, while all three main indexes on Wall Street ended in the red again, Asia enjoyed some positivity.

Hong Kong rose one percent, while Tokyo, Shanghai, Sydney, Seoul, Singapore, Taipei and Jakarta also enjoyed a leg up.

Observers were also keeping tabs on developments after the United States shot down a suspected Chinese spy balloon that had been floating over the country for several days.

Officials are recovering debris from the Atlantic for analysis by intelligence experts and there is no plan to give the remains back to Beijing, officials said Monday.

China, however, has hit out at the move, saying the balloon was an errant weather observation aircraft with no military purpose.

The incident dealt a blow to already tense relations, with Secretary of State Antony Blinken on Friday scrapping a planned rare trip to Beijing designed to contain rising tensions.

“Much of Wall Street is getting nervous over US-China tensions,” said OANDA’s Edward Moya.

“A few months ago, China was not investable. China was becoming a favorite bet with the great reopening, but now rising tensions and possible blacklisting, investors are heading to the sidelines.”

Key figures around 0230 GMT 

Tokyo – Nikkei 225: UP 0.2 percent at 27,754.36 (break)

Hong Kong – Hang Seng Index: UP 1.0 percent at 21,441.50

Shanghai – Composite: UP 0.1 percent at 3,242.93

Dollar/yen: DOWN at 132.33 yen from 132.65 yen on Monday

Euro/dollar: UP at $1.0738 from $1.0728

Pound/dollar: UP at $1.2049 from $1.2020

Euro/pound: DOWN at 89.12 pence from 89.22 pence

West Texas Intermediate: UP 0.9 percent at $74.76 per barrel

Brent North Sea crude: UP 0.8 percent at $81.66 per barrel

New York – Dow:  DOWN 0.1 percent at 33,891.02 (close)

London – FTSE 100: DOWN 0.8 percent at 7,836.71 (close)