Asian markets tumbled Monday after an outsized US jobs report dealt another blow to hopes for more interest rate cuts, while oil extended a rally sparked by new sanctions on Russia's energy sector.

The equity sell-off tracked hefty losses on Wall Street, where all three main indexes finished more than one percent lower as the new trading year continued to falter.

Keenly awaited data on Friday showed the US economy created 256,000 jobs last month, a jump from November's revised 212,000 and surpassing forecasts of 150,000-160,000.

The figures followed news that the crucial US services sector picked up in December, with the prices component soaring more than expected to the highest level since last January. Another report showed job openings hit a six-month high in November.

Hopes that the Federal Reserve will continue cutting rates through 2025 — after making three reductions last year — were dashed when it indicated in December just two cuts over the next 12 months, down from four previously anticipated.

The hawkish pivot came as inflation continues to hover above the bank's two-percent target, while there are concerns that president-elect Donald Trump's plans to slash taxes, regulations, and immigration will reignite prices.

"Given a resilient labor market, we now think the Fed's cutting cycle is over," said Bank of America's Aditya Bhave and other economists. "Inflation is stuck above target: in the December (summary of economic projections), the Fed not only marked up its base case for 2025 significantly but also indicated that inflation risks were skewed to the upside. Economic activity is robust. We see little reason for additional easing."

Equities fell across Asia, with Hong Kong, Taipei, and Manila down more than one percent each, while Shanghai, Sydney, Singapore, Seoul, and Jakarta were also well down. Tokyo was closed for a holiday.

Surging oil prices added to unease, with both major contracts jumping around two percent, extending Friday's gains of more than three percent, after the United States and Britain announced new sanctions against Russia's energy sector, including oil giant Gazprom Neft.

However, commentators do not expect prices to spike too much, even amid speculation that Trump will impose fresh sanctions on Iran.

"A significant and perhaps underpriced risk to crude oil prices is the potential for supply to outstrip demand, especially given OPEC+'s intention to reintroduce barrels to the market," said Stephen Innes at SPI Asset Management.

"Even if US sanctions curtail Iranian oil production by 1.5 million barrels a day — a scenario similar to that during Trump’s previous presidency — this amount could easily be compensated by OPEC+, which is currently holding back 5.8 million barrels a day, or 5.3 percent of total global production capacity."

However, he added that some issues could cause crude to rocket, including an escalation of the Middle East crisis, a significant reduction in Russian output or exports, and a strategic shift by OPEC+ to slash production.

Key figures around 0230 GMT:

• Hong Kong - Hang Seng Index: Down 1.6% at 18,765.65

• Shanghai - Composite: Down 0.3% at 3,157.92

• Tokyo - Nikkei 225: Closed for a holiday

• Euro/dollar: Down at $1.0241 from $1.0244 on Friday

• Pound/dollar: Down at $1.2186 from $1.2210

• Dollar/yen: Down at 157.63 yen from 157.74 yen

• Euro/pound: Up at 84.04 pence from 83.90 pence

• West Texas Intermediate: Up 2.0% at $78.06 per barrel

• Brent North Sea Crude: Up 1.8% at $81.17 per barrel

• New York - Dow: Down 1.6% at 41,938.45 (close)

• London - FTSE 100: Down 0.9% at 8,248.49 (close)