A gauge of emerging market stocks extended gains to a seventh session on Monday, with Chinese stock markets rising following Beijing’s latest moves to help its real estate sector, while most currencies remained stable in anticipation of several rate decisions this week.
At 0451 GMT, MSCI’s emerging market stock index gained 0.2%, reaching its highest level since April 2022, while the currency index was flat.
Most emerging market currencies posted weekly gains last week, with both MSCI EM indexes posting their fourth consecutive weekly gain, as the dollar weakened following low inflation, which boosted hopes of the Federal Reserve to cut interest rates soon, although cautious comments from policymakers have dampened enthusiasm.
“Markets remain in risk mode and support the EM FX market,” said Frantisek Taborsky, EMEA FX & FI strategist at ING.
“For today we are rather neutral and we could see a slight retracement of the previous days’ gains.
Chinese stock markets closed higher, with sentiment remaining optimistic after Beijing announced “historic” measures last week to stabilize its crisis-ridden real estate sector, with the central bank facilitating 1 trillion yuan ($138 billion) of additional funding and relaxation of mortgage rules, and local governments being willing to buy “some” apartments.
Separately, China also left its benchmark lending rates unchanged, in line with market expectations.
Investors also followed developments in Iran, with authorities and state media reporting that Iranian President Ebrahim Raisi had died in a helicopter crash in mountainous terrain near the border with Iran. ‘Azerbaijan.
In central and eastern Europe, the Hungarian forint gained 0.2% against the euro in holiday trading ahead of a central bank decision on Tuesday where the bank is expected to cut its base rate by 50 basis points.
The country’s stock markets were closed due to a public holiday.
The stock markets of Poland, Romania and Turkey rose by 0.6% to 1%.
The South African rand was steady at 18.16 per dollar, with focus on the country’s national elections next week, while stocks gained 0.6%.
Elsewhere, the Ugandan shilling weakened after a downgrade in the country’s credit rating spooked commercial banks into buying hard currencies, traders said.
S&P revised Ivory Coast’s outlook to “positive”, retaining the “BB-/B” rating, while Fitch said it sees implications for Georgia’s sovereign credit profile if recent events exacerbated political tensions.
HIGHLIGHTS :
**Vietnamese parliament elects new president amid cabinet reshuffle
** South Africa’s Supreme Court rules that ex-President Zuma has no right to run in parliamentary elections
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