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Emerging market stocks rallied on Friday, looking to end a third consecutive week higher, while Romania ended a busy central bank week with a 1 percentage point hike in interest rates.
The MSCI Emerging Markets Equity Index hit a one-month high and rose 0.9% for the last time as gains were broadly spread.
Attention now turns to US nonfarm payrolls data for July as the US Federal Reserve tries to calm labor demand to tame inflation. The number is expected to increase to a lesser extent than last month.
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Taiwan stocks closed up 2.3%, while Chinese blue chips added 1.4%. With the exception of Turkish and Russian equities, most other emerging European, Middle Eastern and African markets advanced.
In a week marked by geopolitical concerns over Taiwan and pessimistic PMIs fueling growth concerns, Beijing’s promise of increased support for the local market and economy, as well as US data that allayed some fears that the world’s largest economy could sink into recession, helped assets in the developing world.
Stocks ended the week up around 1%, while currencies rose 0.1%.
“We expect emerging market equities to generate positive mid-single-digit total returns this year…given attractive valuations, continued constructive earnings growth prospects and policy easing. macroeconomics in China,” Alejo Czerwonko, CIO Emerging Markets Americas at UBS Global Wealth Management, said in a note.
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Before a decision by the Romanian central bank later in the day, the leu was stable.
Five out of seven analysts polled by Reuters expect policymakers to raise Romania’s benchmark interest rate again by one percentage point to 5.75%. It would be the bank’s eighth consecutive monthly increase since October.
This comes after the Reserve Bank of India raised its key rate by 50 basis points to 5.40%, the third hike in the current cycle. The rupee was flat.
“We expect the RBI to continue with more moderate tightening ahead,” said Mitul Kotecha, head of EM strategy at TD Securities, expecting the next hike in September. “We maintain our terminal rate expectation of 6.0% by the first quarter of 2023.”
Most emerging market central banks, mired in stubbornly high inflation and the Fed on a tightening path, embarked on tightening cycles.
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On Thursday, the Czech rate was kept stable at 7%. Some analysts suggest another rate hike in September may be needed to appease investors. Late Wednesday, Brazil’s central bank signaled a smaller “residual” rise at its next meeting after rising 1,225 basis points since March last year.
For 2022 Emerging Markets FX performance chart see http://tmsnrt.rs/2egbfVh For 2022 MSCI Emerging Market Index performance chart see https://tmsnrt.rs/2egbfVh
For TOP NEWS in emerging markets
For the CENTRAL EUROPE market report, see
For the TURKISH market report, see
For the RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru; Edited by Shailesh Kuber)
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Content of the article
Emerging market stocks rallied on Friday, looking to end a third consecutive week higher, while Romania ended a busy central bank week with a 1 percentage point hike in interest rates.
The MSCI Emerging Markets Equity Index hit a one-month high and rose 0.9% for the last time as gains were broadly spread.
Attention now turns to US nonfarm payrolls data for July as the US Federal Reserve tries to calm labor demand to tame inflation. The number is expected to increase to a lesser extent than last month.
Advertisement 2
Content of the article
Taiwan stocks closed up 2.3%, while Chinese blue chips added 1.4%. With the exception of Turkish and Russian equities, most other emerging European, Middle Eastern and African markets advanced.
In a week marked by geopolitical concerns over Taiwan and pessimistic PMIs fueling growth concerns, Beijing’s promise of increased support for the local market and economy, as well as US data that allayed some fears that the world’s largest economy could sink into recession, helped assets in the developing world.
Stocks ended the week up around 1%, while currencies rose 0.1%.
“We expect emerging market equities to generate positive mid-single-digit total returns this year…given attractive valuations, continued constructive earnings growth prospects and policy easing. macroeconomics in China,” Alejo Czerwonko, CIO Emerging Markets Americas at UBS Global Wealth Management, said in a note.
Advertisement 3
Content of the article
Before a decision by the Romanian central bank later in the day, the leu was stable.
Five out of seven analysts polled by Reuters expect policymakers to raise Romania’s benchmark interest rate again by one percentage point to 5.75%. It would be the bank’s eighth consecutive monthly increase since October.
This comes after the Reserve Bank of India raised its key rate by 50 basis points to 5.40%, the third hike in the current cycle. The rupee was flat.
“We expect the RBI to continue with more moderate tightening ahead,” said Mitul Kotecha, head of EM strategy at TD Securities, expecting the next hike in September. “We maintain our terminal rate expectation of 6.0% by the first quarter of 2023.”
Most emerging market central banks, mired in stubbornly high inflation and the Fed on a tightening path, embarked on tightening cycles.
Advertisement 4
Content of the article
On Thursday, the Czech rate was kept stable at 7%. Some analysts suggest another rate hike in September may be needed to appease investors. Late Wednesday, Brazil’s central bank signaled a smaller “residual” rise at its next meeting after rising 1,225 basis points since March last year.
For 2022 Emerging Markets FX performance chart see http://tmsnrt.rs/2egbfVh For 2022 MSCI Emerging Market Index performance chart see https://tmsnrt.rs/2egbfVh
For TOP NEWS in emerging markets
For the CENTRAL EUROPE market report, see
For the TURKISH market report, see
For the RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru; Edited by Shailesh Kuber)
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