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Asian shares extended a global rally on Monday on optimism the Federal Reserve would pause its rate hikes this month after a mixed U.S. jobs report, while oil jumped as Saudi Arabia pledged big output cuts in July.

Brent oil jumped $1.82, or 2.4%, to $77.95 a barrel, while U.S. crude climbed $1.77, or 2.4%, to $73.51. Oil prices have recently come under pressure amid heightened concerns about China's slowing economic recovery. [O/R]

Oil rose as Saudi Arabia announced it would cut its output to 9 million barrels per day in July, from around 10 million bpd in May, the biggest reduction in years, while a broader OPEC+ deal to limit supply into 2024 also underpinned futures.

"With Saudi Arabia protecting oil prices from sliding too low ... we think oil markets are now more prone to a shortfall later this year," said Vivek Dhar, a mining and energy commodities strategist at Commonwealth Bank of Australia.

"We think Brent futures will rise to $US85/bbl by Q4 2023 even with a tepid demand recovery in China factored in."

On Monday, Japan's Nikkei surged 1% to a 33-year high, Australia's resources-heavy shares gained 1% and South Korea's KOSPI rose 0.5%.

S&P 500 futures dipped 0.1% and Nasdaq futures dropped 0.3% in Asian hours, after a strong rally on Friday, driven by a mixed U.S. jobs report, a resolution to the debt-ceiling issue and the prospect of a U.S. rate pause this month.

The tech-heavy Nasdaq rose 1% on Friday and posted its sixth-straight week of gains that marked its best winning streak since January 2020, while the Dow Jones gained 2%, and the S&P 500 added 1.45%.

Data on Friday showed U.S. economy added 339,000 jobs last month, higher than most estimates, bolstering expectations of Fed hikes in July, with markets tipping a 50% chance for that.

However, moderating wage growth and rising jobless rate in Friday's jobs report argued for a case of pause in June.

Markets are still leaning towards a rate pause from the Fed at the next policy meeting, but have priced out almost any chance of a rate cut by the end of this year.

Yields on U.S. two-year Treasuries surged 16.2 basis points on Friday to 4.503% and ten-years rose 8 bps to 3.6903%, in part driven by Fitch Ratings saying the U.S.' "AAA" credit rating would remain on negative watch, despite the debt agreement.

That in turn helped the dollar gain 0.5% on Friday and stay elevated at 104.16 against its peers early on Monday. The greenback jumped 0.8% on Japanese yen to 139.94 while the euro eased 0.5% to $1.0706.

The Australian dollar was an outperformer against a strong greenback, up 0.5% to $0.6605, on bets that the Reserve Bank of Australia will have to raise rates higher and for longer on domestic wage pressures.

The RBA will hold a policy meeting on Tuesday. In the wake of a strong increase in the minimum wages for the next financial year, markets are now split on whether it would hold rates steady or hike it further to 4.1%.

The Bank of Canada will meet on Wednesday. A majority of economists polled by Reuters expect the BOC to keep interest rates on hold at 4.5% for the rest of the year but the risk of one more rate hike was high.