EM shares, cur­ren­cies rise

Gulf Times Business - - BUSINESS -

Emerg­ing stock and cur­rency mar­kets inched higher yes­ter­day as in­vestors took a pos­i­tive view of US midterm elec­tions that gave Democrats the abil­ity to thwart Pres­i­dent Don­ald Trump but left Repub­li­cans firmly in charge of the Se­nate.

A dip in the dol­lar due to re­duced ex­pec­ta­tions of more pro-busi­ness pol­icy moves by Trump, which might soften the case for fur­ther rises in US in­ter­est rates in the fu­ture, also ben­e­fited a num­ber of ma­jor emerg­ing cur­ren­cies.

“There was some fear and risk of a sen­sa­tional re­sult to­day, but it has come out as ex­pected.

It is a good re­sult for con­sis­tency in the mar­ket,” said Nick Twidale, an an­a­lyst with Rakuten Se­cu­ri­ties in Syd­ney.

“We’ll see a cou­ple of days of risk-on trad­ing on the back of these re­sults. Then we’ll go back to closely analysing the US-China sit­u­a­tion. The next time Trump speaks on trade, there will be a lot of at­ten­tion on what he says.”

The MSCI’s bench­mark emerg­ing eq­uity in­dex gained 0.58%, with Chi­nese eq­ui­ties end­ing lower in choppy trade as an un­cer­tain eco­nomic out­look out­weighed gov­ern­ment pledges of sup­port for wa­ver­ing mar­kets.

But the yuan, buf­feted by con­cerns over Trump’s ag­gres­sive trade moves against Bei­jing this year, re­cov­ered al­most all of an early loss as the mood among fi­nan­cial in­vestors glob­ally turned more pos­i­tive.

China’s for­eign ex­change re­serves fell to a one-and-a-half year low in Oc­to­ber, sug­gest­ing au­thor­i­ties may be step­ping up in­ter­ven­tion amid mount­ing trade pres­sure.

Stock mar­kets in emerg­ing economies this year have fallen al­most 14%, bear­ing the brunt of higher US rates and wor­ries over global growth and the US-China stand-off on trade.

Hong Kong and Tai­wan stocks out­per­formed their main­land Chi­nese coun­ter­parts, with the Hang Seng clos­ing up 0.10% and Tai­wan up 0.9%, at its high­est in a lit­tle over two weeks.

The emerg­ing mar­ket cur­rency in­dex was up about 0.3%, with the dol­lar con­tin­u­ing to slip as the ses­sion wore on.

South Africa’s rand firmed more than 1% to its strong­est lev­els since Au­gust, while the Turk­ish lira edged back into pos­i­tive ter­ri­tory and sent the coun­try’s dol­lar bonds to their high­est since Au­gust.

The Rus­sian rou­ble was up by 0.3%, with data show­ing in­fla­tion ac­cel­er­ated in Oc­to­ber. Stocks, how­ever, de­clined as the mar­ket priced in lower oil prices and the prospect of more US sanc­tions on Moscow.

The Pol­ish zloty gained for the fifth straight ses­sion ahead of a cen­tral bank de­ci­sion at which no rate change ex­pected.

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