BENGALURU- Most Asian equities advanced on Friday after the US Federal Reserve delivered a widely expected rate cut in a volatile week that saw Donald Trump returning to the White House, with focus now on further stimulus measures from China.
China’s week-long National People’s Congress Standing Committee meeting concludes later in the day with investors expecting further stimulus measures which could provide support for regional markets.
More stimulus will support emerging market stocks and currencies such that it is fair to call the worst for emerging market assets is over, Poon Panichpibool, a markets strategist at Krung Thai Bank, said.
“But it remains to be seen how big the upsides would be for EM assets amid Trump 2.0.”
Trump’s victory in the US presidential election has stoked fears that his threat to impose tariffs, especially those on China, would impact most emerging market economies which rely on China as their top trading partner.
Of particular concern for the Philippines, where remittances support a significant portion of growth, is vice presidential candidate JD Vance’s proposal for a 10 percent tax on remittances.
The Philippine peso declined 0.3 percent, while equities retreated 0.4 percent heading for a third straight day of declines. Shares were on track for the worst week since mid-June.
Most other emerging market equities advanced during the day and for the week, brushing off a fall during the US election, after the US Federal Reserve delivered a rate cut on Thursday.
The Fed signaled a cautious and patient approach to subsequent easing, although analysts still widely believe another rate cut is still on the table in December.
“If the Fed continues to cut rates…. I would expect the EM FXs to regain some strength with some weakness in the US dollar. In this scenario, EM stocks could gain some ground as well,” Panichpibool said.
Shares in Indonesia jumped 0.9 percent, while those in Taiwan climbed 0.6 percent. Taiwan shares were on track for their best week since mid August.
Stocks in Singapore advanced 1.8 percent to hit their highest level since November 2007, led by gains in the city-state’s top banks following upbeat results.
Shares of the OCBC UOB and DBS all hit record highs. Currencies in the region were mixed with the Indonesian rupiah and the Malaysian ringgit climbing 0.3 percent and 0.4 percent, respectively while the Thai baht retreated 0.4 percent
