MARKET UPDATE
Asia shares bounce as China mood turns less bleak.
Asian shares climbed on Monday as markets wagered the Federal Reserve was done raising U.S. interest rates, and on hopes the steady drip feed of policy stimulus from Beijing would be enough to at least 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 newspapers reported a jump in real estate transactions in Beijing and Shanghai over the weekend after the cuts to mortgage rates and downpayment ratios,” wrote analysts RBC Capital Markets.
European stock futures edge higher.
European stock markets are expected to edge higher at the open Monday, helped by gains in Asia after a strong week on Wall Street, ahead of a speech by ECB head Christine Lagarde.
Activity is likely to be limited Monday with the U.S. on holiday.
Sentiment boost by Chinese equity market gains
European equity indices are likely to benefit from the positive tone seen in Asia overnight, with the Chinese markets the best performers on increased optimism that a series of small policy steps from Beijing might lead to a substantial stimulus package in the near future.
Sentiment was also boosted Monday as property developer Country Garden Holdings earned bondholder approval to extend some debt deadlines, averting a potential default.
Chinese authorities have tended to focus their measures on the beleaguered property sector, including increasing local dollar liquidity and loosening some mortgage rules last week.
Oil inches higher on OPEC+ supply cut expectations.
Oil prices edged higher on Monday, supported by expectations that major producers will keep supplies tight, and growing hopes that the Federal Reserve will leave interest unchanged to avoid dampening the U.S. economy.
Brent crude November futures was up 3 cents at $88.58 a barrel at 0333 GMT. U.S. West Texas Intermediate crude (WTI) October futures rose 9 cents to $85.64 a barrel.
The slight gains in Asian trade came after both contracts ended last week at their highest levels in more than half a year, having weakened in the two previous weeks.
“Crude oil prices have been primarily driven by the anticipation of additional supply cuts from major oil-producing nations, Russia and Saudi Arabia,” said Sugandha Sachdeva, executive vice president and chief strategist at Acme Investment Advisors.
Sachdeva noted, however, that the steady increase in U.S. oil production could limit further significant gains in price.
Russian Deputy Prime Minister Alexander Novak said on Thursday that Russia had agreed with partners in the Organization of the Petroleum Exporting Countries (OPEC) on the parameters for continued export cuts. An official announcement with details of the planned cuts is expected this week.
Russia has already said it will cut exports by 300,000 barrels per day (bpd) in September, following a 500,000-bpd cut in August. Saudi Arabia is also expected to roll over a voluntary 1 million bpd cut into October.
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