Indonesian shares hit a near 10-month high on Monday, while other Asian stock markets made modest gains as optimism over US stimulus was overshadowed by a possible escalation in tensions between the United States and China.

Indonesia has been among the hardest hit countries by the pandemic as its daily number of coronavirus infections has accelerated in recent weeks and its death toll remains the highest in Southeast Asia.

However, other emerging Asian stock markets retreated from highs hit over vaccine optimism and the $908 billion aid bill in the United States after Reuters reported that President Donald Trump's administration was preparing sanctions on some Chinese officials over the crackdown in Hong Kong.

"After an initial rise on US stimulus hopes, early rallies quickly faded...I expect the negativity in the major Asian markets to be short-lived," Jeffrey Halley, senior market analyst, Asia Pacific, at OANDA, wrote.

In the long term, the news of stimulus should outweigh the negative headlines on geopolitical tensions, he added.

Even upbeat trade data from China, the region's economic engine, failed to spur a rally in Asian equities. Chinese exports rose at the fastest pace since February 2018 in November, jumping 21.1% from a year earlier.

Meanwhile, emerging Asian currencies were a shade higher against a flat dollar, with only the Taiwanese dollar a stand out at 0.9% stronger.

The ringgit was knocked 0.3% lower after Fitch downgraded Malaysia's credit rating on expectations of worsening fiscal pressure, increased debt and political uncertainty.

However, analysts at Mizuho bank said the downgrade was "not a cause for alarm" as a wider fiscal deficit to entrench the recovery was necessary.

"Malaysia's medium-term growth outlook remains positive and highly constructive, with near-term support possibly being expedited by the recovery in oil prices as well as vaccine boost to global demand and tourism."

Financial markets in Thailand were shut due to a holiday.