MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 1.0 per cent, having jumped 2.3 per cent last week
Asian shares rose on Monday as markets speculated the Fed was done hiking interest rates, and on optimism the drip feed of policy stimulus from Beijing would be sufficient to stabilise the Chinese economy.
A holiday in the US made for thin trading ahead of key figures on U.S. services and Chinese trade and inflation later during the week.
More policy action is also expected from Beijing, including easing restrictions on home buying.
There was relief that struggling property developer Country Garden won approval from its creditors to extend payments for an onshore private bond.
Chinese blue chips responded by increasing another 1.3 per cent, on top of last week’s 2.2 per cent jump.
MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 1.0 per cent, having jumped 2.3 per cent last week. Japan’s Nikkei added 0.5 per cent, after rallying 3.4 per cent last week.
The broader Topix climbed 3.7 per cent last week to its highest in 33 years, helped by data showing firms made record profits in the June quarter.
Yet the Topix still only has a price to earnings ratio of 14, compared to 23 for the S&P 500 and 29.5 for the Nasdaq.
Investor sentiment on the tech sector will be tested this week by the IPO for chip giant Arm Holdings, which is aiming for a price in the range of $47 to $51 valuing the firm between $50 billion and $54 billion.
S&P 500 futures and Nasdaq futures were both little changed early on Monday.
Stocks had strengthened on Friday after a benign August U.S. payrolls report bolstered expectations for an end to rate hikes.
While the headline jobs number topped forecasts, downward revisions to the previous two months and a slump in wage growth pointed to a loosening in the labour market.
The jobless rate also climbed as more people went looking for work, leaving the vacancies to unemployed ratio at its lowest since September 2021.
This continued rebalancing of the labour market is consistent with our view that the Fed’s rate hike in July was the last of the cycle, wrote analysts at Goldman Sachs.
We continue to expect unchanged policy at both the September and November Federal Open Market Committee (FOMC) meetings, they added.
The market appeared to agree as futures now imply a 93 per cent chance of rates staying steady this month and a 67 per cent possibility that the entire tightening cycle is over.
Treasuries initially rallied on the jobs data, but soon ran into selling and longer-dated yields ended Friday higher. There was no trading in cash Treasuries on Monday, but futures eased a little further.