Emerging market shares and currencies gain after US midterm results as dollar eases

An investor yawns in front of an electronic board showing stock information at a brokerage house in Hangzhou, Zhejiang province. — Reuters pic
An investor yawns in front of an electronic board showing stock information at a brokerage house in Hangzhou, Zhejiang province. — Reuters pic

NEW YORK, Nov 7 ― Emerging stock and currency markets inched higher today 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 per cent, 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 per cent, 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 per cent and Taiwan up 0.9 per cent, at its highest in a little over two weeks.

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

South Africa's rand firmed more than 1 per cent 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 per cent, 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. ― Reuters

Related Articles