Asia shares extend rally as China mood turns less bleak

4 September 2023 (Reuters) Asian shares pushed higher on Monday as markets wagered the Federal Reserve was done raising U.S. interest rates, and on hopes the drip feed of policy stimulus from Beijing would be enough to stabilise the Chinese economy.

A holiday in the United States made for thin trading ahead of key readings on U.S. services and Chinese trade and inflation later in the 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.

Chinese blue chips (.CSI300) reacted by rising another 1.3%, on top of last week's 2.2% bounce.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) added 1.0%, having climbed 2.3% last week. Japan's Nikkei (.N225) rose 0.5%, after rallying 3.4% last week.

The broader Topix (.TOPX) jumped 3.7% last week to its highest in 33 years, helped by data showing companies 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 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 were both little changed early on Monday. EUROSTOXX 50 futures added 0.3% and FTSE futures rose 0.4%.

Stocks had firmed on Friday after a benign August U.S. payrolls report hardened 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.