Emerging mkts rises to 1-week high

LONDON, Oct 3, (RTRS): Emerging equities rose to a one-week high on Tuesday, following gains in developed markets after strong US activity data, but a firmer dollar kept currencies such as the lira and rand under pressure.

MSCI’s benchmark emerging stocks index rose 0.8 percent, on track for a third straight day of gains, with global equities pushing to fresh all-time highs.

The moves followed a record close on Wall Street after US manufacturing activity surged to a near 13-1/2-year high in September. But the upbeat data lifted the dollar and US 10-year Treasury yields, which weighed on emerging currencies.

Kiran Kowshik, an emerging market strategist at UniCredit, said the market was pricing in a recovery in the “Trump trade” whereby President Donald Trump’s promised tax cuts and spending splurge are expected to prove reflationary.

“Also the very strong PMI out of the US suggests growth is holding up quite well,” he said.

Emerging equities were also underpinned by Monday’s strong manufacturing activity data from China and emerging Europe, with markets such as Hong Kong catching up after being closed for a public holiday on Monday.

Hong Kong stocks surged 2.2 percent, led by Chinese banks and insurers after China’s central bank cut reserve ratios , whilst China’s stronger-than-expected September factory activity boosted materials.

South Korea and Chinese mainland markets remained closed.