Shares, commodities rise as sentiment towards China brightens

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Global shares rose on September 4, lifted by growing expectations that the Federal Reserve will not raise interest rates anymore, and by hopes that China's steady drip feed of policy stimulus might stabilise the economy.

A holiday in the United States kept a lid on activity ahead of key readings on U.S. services and Chinese trade and inflation later this week.

More policy action is also expected from Beijing, including relaxing restrictions on home buying.

There was relief that embattled property developer Country Garden won approval from its creditors to extend payments for an onshore private bond.

"Taken alongside other measures announced in prior weeks, it does appear that momentum is building for policy changes in China that could put a floor under sentiment and lift consumption," Lazard chief market strategist Ron Temple said.

"I continue to worry that there is not a sufficient sense of urgency among Chinese policymakers, but moves like those taken this week, combined with stabilization/improvement in PMI data could signal an upcoming turn in investor psychology," he said.

MSCI's broadest index of Asia-Pacific shares outside Japan added 1.1%, having climbed 2.3% last week, thanks in large part to a 1.3% rise in Chinese blue chips.

The MSCI All-World index, which last week staged its strongest weekly rally since mid-July, was up 0.3%, while the dollar was around 0.2% lower on the day.

Investor sentiment in the tech sector will be tested this week by the initial public offering for chip giant Arm Holdings, which is aiming for a price in the range of $47 to $51, valuing the company between $50 billion and $54 billion.

S&P 500 futures and Nasdaq futures rose between 0.2%-0.3%, while European stocks neared one-month highs. The STOXX 600 was up 0.6%, led by gains in drugmaker Novo Nordisk, which last week briefly overtook French luxury group LVMH as Europe's most valuable company, and Dutch chipmaker ASML.

PAYROLLS BOOST

Stocks rose on Friday after August's U.S. payrolls report firmed expectations for an end to rate hikes.

While the headline jobs number topped forecasts, downward revisions to the previous two months and a dip in wage growth pointed to a loosening in the labour market.

The jobless rate also jumped as more people went looking for work, leaving the vacancies to unemployed ratio at its lowest since September 2021.

"The soft landing crowd will be pleased that the labour market is softening without much stress at the moment," Deutsche Bank strategist Jim Reid.

"However, the hard-landing argument must be buoyed by the huge downward momentum in recent months and revisions in payrolls. Any path to a hard landing, outside of a shock, has to go via signs of a soft landing first," he said.

Futures now imply a 93% chance of rates staying unchanged this month and a 67% probability that the entire tightening cycle is over.

At least seven Fed officials are due to speak this week ahead of the next policy meeting on Sept. 19-20.

Central banks in Canada and Australia hold their own meetings this week and both are expected to hold rates steady.

The head of the European Central Bank, Christine Lagarde, is speaking later on Monday, with the market now leaning against a hike at its September meeting after a run of soft data.

The relative outperformance of the U.S. economy underpinned the dollar at 146.33 yen, not far from its recent 10-month peak of 147.37. The euro rose 0.3% to $1.0803, still within sight of its recent low at $1.0765.

In commodities, gold benefited from the diminished risk of a U.S. rate rise to stand at $1,940 an ounce.

Oil prices were near seven-month highs on tightening supply as Saudi Arabia was widely expected to extend a voluntary 1 million barrel per day oil production cut into October.

Brent crude futures rose 0.2% to $88.75 a barrel, as did U.S. futures, reaching $85.73.