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China shares rally, G20 summit looms - what's moving markets.

Scott Kanowsky | Investing.com

© Reuters.


Investing.com -- Chinese shares jump as traders bet that recent U.S. unemployment figures may convince officials at the Federal Reserve to keep interest rates steady this month, while markets awaited more possible stimulus measures from Beijing. Elsewhere, international leaders prepare to attend the G20 summit in India later this week, although the gathering will not feature Chinese President Xi Jinping.

1. Chinese stocks surge

Shares in China rallied on Monday, buoyed by a slow drip of stimulus measures by Beijing and U.S. labor market figures which bolstered predictions that the Federal Reserve will not raise interest rates at its next policy meeting.

The Shanghai Shenzhen CSI 300 and Shanghai Composite indices both jumped by more than 1% each in a day of relatively thin trading stemming from the U.S. end-of-summer holiday.

Hong Kong's Hang Seng index, meanwhile, climbed by more than 2%, fueled by news that Country Garden Holdings had received approval from its bondholders to extend some debt deadlines. The stock rose by over 15%, making it one of the top performers on the Hang Seng, as hopes grew that the embattled property developer would be able to avert a possible default.

Monday's stock market gains were also underpinned by Friday's U.S. jobs data which showed that the unemployment rate ticked higher while wage growth cooled. Markets are betting the Fed will keep interest rates on hold at their meeting later this month -- a potential relief for Asian shares that have been battered by elevated rates over the past year.

2. Oil prices choppy

Oil prices held near three-week highs in choppy trading amid optimism that top crude producers will agree to further output cuts that could keep global supplies tight.

Russia has said that it will outline more reductions in supply this week. The statement added to speculation that Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, will also extend a one million barrel per day cut into October.

Bets that the Fed will not hike rates further this month -- and, by extension, not place extra downward pressure on economic activity -- also bolstered oil prices.

By 05:21 ET (09:21 GMT), the U.S. crude futures traded 0.1% lower at $85.44 a barrel, while the Brent contract dipped by 0.2% to $88.42 per barrel, with volumes light due to the U.S. market holiday.

Both contracts ended last week at their highest levels in more than half a year, rebounding after having weakened in the two previous weeks.

3. G20 summit ahead

World leaders will convene in New Delhi for the G20 summit later this week, with the group's western members at odds with developing nations like China and Russia over major issues like the war in Ukraine and climate change.

Illustrating the divide is Chinese President Xi Jinping's decision not to attend, a move that threatens to remove some of the luster off of the event. Xi's presence could have provided a possible chance for him to speak face-to-face with U.S. President Joe Biden during a time of trade tensions between the world's two largest economies. Xi and Biden last met at the previous G20 forum in Indonesia in November.

Biden said on Sunday that he was "disappointed" by Xi's plan to skip the meeting, but noted that he was "going to get to see him." However, Biden did not say when exactly this discussion would happen.

4. Novo Nordisk unveils weight-loss drug Wegovy in Britain

Copenhagen-listed shares in Novo Nordisk (NYSE:NVO) (CSE:NOVOb) rose in early European trading on Monday after the Danish drugmaker released its popular weight-loss injection in Britain.

Novo Nordisk has been attempting to grow the European presence of the drug, known as Wegovy, although this campaign has been hampered as it struggles to keep up with strong U.S. demand.

The British launch of Wegovy, which is shown to help patients shed around 15% of body fat when used with exercise and other lifestyle changes, will be "controlled and limited," the company said. It will be the second release of the drug in Europe in a little over a month. In the region, Wegovy is also currently available in Denmark, Norway and Germany.

Soaring demand for Wegovy, as well as Novo Nordisk's diabetes drug Ozempic, have pushed the firm's shares to fresh highs. On Friday, the stock at one point topped fashion giant LVMH to become Europe's most valuable listed business.

5. Lagarde speech in focus

European Central Bank President Christine Lagarde is set to speak later in the session, with investors eager to hear any clues ahead of this month's policy-setting meeting.

What exactly the ECB plans to do with interest rates remains a cause for debate in the build-up to the September 14 event. According to Reuters, money markets saw a 30% chance of 25 basis point rate hike as of last Thursday, shrinking from as high as 60% in the prior week. Like other central banks around the world, ECB officials are faced with the task of cooling price gains without sparking a wider economic meltdown. The solution to the problem has been a tightening cycle that has brought borrowing costs up to a record high last reached when the ECB was attempting to prop up the euro in 2001.

Data showing Eurozone inflation well above the ECB's 2% target and contracting business activity have only added to the uncertainty, a prospect that could lead to volatility in bond markets and the euro prior to the gathering.

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