Oil prices climbed 0.8 percent after Israel and Hezabollah traded rocket salvos and air strikes on Sunday, stirring worries about possible supply disruptions if the conflict escalated.

Brent rose 55 cents to $79.57 a barrel, while US crude added 56 cents to $75.39 per barrel.

Investors are also anxiously awaiting earnings from AI darling Nvidia on Wednesday to see if it can match the market's uber-high expectations.

The stock is up some 150 percent year-to-date, accounting for around a quarter of the S&P 500's 17 percent year-to-date gain.

"Nvidia will beat consensus expectations, they always do, but investors are so ingrained in seeing revenue come in $2 billion plus above the analysts' consensus or we could easily see a sell the news event," said Chris Weston, head of research at broker Pepperstone.

That means Nvidia would have to report sales of $30 billion or more and guidance for Q3 of $33 billion or above, he added.

On Monday, S&P 500 futures and Nasdaq futures were steady after starting a shade lower.

EUROSTOXX 50 futures dipped 0.2 percent, while FTSE futures were closed for a holiday.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.8 percent, after rising 1.1 percent last week, while South Korea was barely changed. Chinese blue chips were also near flat.

Japan's Nikkei lost 1 percent as a stronger yen pressured exporter stocks.

The yen has jumped on a broadly weaker dollar after Federal Reserve Chair Jerome Powell said the time had come to start easing policy and emphasised that the central bank did not want to see further weakening in the labor market.

"Importantly there was a notable absence of caveats such as 'gradual/gradualism' as used by other Fed officials," noted Tapas Strickland, head of market economics at NAB.

"The jobs report on September 6 is clearly important as Powell is willing to cut rates to ward off downside risks to employment and to maintain a strong labor market," he added. "In summary, Powell has increased the chances of a soft landing."

LOTS OF CUTS COMING

Figures on US personal consumption and core inflation are due on Friday, along with a flash reading on European Union inflation. Analysts generally assume the data will be benign enough to allow for rate cuts in September.

Fed fund futures are fully priced for a quarter-point cut at the Sept. 18 meeting, and imply a 38 percent chance of an outsized move of 50 basis points. The market also has 103 basis points of easing priced in for this year and another 122 basis points in 2025.

"We continue to expect the FOMC to deliver an initial string of three consecutive 25bp cuts at the September, November, and December meetings," said analysts at Goldman Sachs.

"Our forecast rests on our assumption that the August employment report will be stronger than the July report, but we continue to think that if instead the August report is weaker than we expect, then a 50bp cut would be likely."

Markets are also fully priced for a quarter-point cut from the European Central Bank next month, and a total 163 basis points of easing by the end of 2025.

Yields on two-year Treasuries stood at 3.91 percent, having fallen almost 10 basis points on Friday, while 10-year yields held at 3.79 percent.

The dollar slipped a further 0.5 percent to 143.64 yen, having fallen 1.3 percent on Friday. The euro was up at $1.1191 and just off a 13-month top, while the Swiss franc CHF= held firm at 0.8461 per dollar.

A softer dollar combined with lower bond yields to underpin gold at $2,514 an ounce, and near an all-time peak of $2,531.60.