Big daily gains by emerg­ing mar­kets

The Star Early Edition - - BUSINESS REPORT / INTERNATIONAL - Karin Stro­hecker

EMERG­ING-MAR­KET stocks en­joyed their big­gest daily gains in nearly four weeks yes­ter­day, al­though weaker oil prices took a toll on many mar­kets, with Rus­sia’s rou­ble down half a per­cent.

MSCI’s emerg­ing eq­uity bench­mark rose 0.7 per­cent, lifted by healthy gains in heavy­weights Tai­wan and Hong Kong, which jumped about 1 per­cent, with stocks in main­land China match­ing those gains thanks to signs of tight liq­uid­ity con­di­tions eas­ing.

How­ever, cur­ren­cies failed to take ad­van­tage of a tepid dol­lar af­ter weaker-than-fore­cast data on US hous­ing and con­sumer sen­ti­ment on Fri­day cast doubt on the health of the world’s top econ­omy. This led the green­back to re­verse gains made in the wake of the Fed­eral Re­serve’s rate hike.

The rou­ble slipped 0.5 per­cent against the dol­lar, trad­ing at its weak­est in one month as oil prices slid lower.

The fall in the price of crude prompted Moscow pol­icy-mak­ers on Fri­day to trim the key in­ter­est rate by 25 ba­sis points to 9 per­cent – less than some of the an­a­lysts had ex­pected.

In­fla­tion

Ex­plain­ing the de­ci­sion, cen­tral bank gov­er­nor Elvira Nabi­ul­lina said an­nual in­fla­tion had neared its long-awaited goal of 4 per­cent as in­fla­tion­ary ex­pec­ta­tions of house­holds had fallen to an all-time low in May.

“What was in­ter­est­ing about that meet­ing, more than the de­ci­sion it­self, was the rhetoric,” Cris­tian Mag­gio, the head of emerg­ing mar­kets strat­egy at TD Se­cu­ri­ties, said. “The Cen­tral Bank of Rus­sia came across more hawk­ish than what the mar­ket had ex­pected.”

The mar­ket was in the process of repric­ing, Mag­gio said. Be­fore the meet­ing the ex­pec­ta­tion was 300 ba­sis points worth of cuts over the year.

Other cur­ren­cies fared lit­tle bet­ter, with Mexico’s peso and Is­rael’s shekel eas­ing 0.3 per­cent, while Turkey’s lira slipped 0.2 per­cent.

Cur­ren­cies across cen­tral Europe weak­ened against the dol­lar, with the Pol­ish zloty and the Hun­gar­ian forint eas­ing 0.2 per­cent.

Ro­ma­nia’s leu hov­ered near a more than four-year low. The cur­rency was hit by po­lit­i­cal up­heavals last week. The rul­ing left­ists have filed a no-con­fi­dence mo­tion against Prime Min­is­ter Sorin Grindeanu. – Reuters

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