BENGALURU- Emerging market assets broadly rose on Friday, with MSCI’s index tracking equities on track for its best week in nearly four months, as closely watched US economic data soothed jitters over slowing growth while keeping the case for Federal Reserve September policy easing intact.
MSCI’s index tracking emerging market stocks rose 1.6 percent as bourses in Asia broadly strengthened, led by stocks in Taiwan and the Philippines
That tracked a rise in global stocks, after stronger-than-expected US retail sales data on Thursday, in tandem with inflation data earlier in the week, brought relief to investors worried about growth in the world’s largest economy after sharp bouts of volatility earlier in the month.
The EM stocks index is on track to rise 2.8 percent for the week, its best week since April.
An index tracking emerging market currencies was flat on the day, but was set for weekly gains of 0.4 percent and is hovering around 2022 highs.
While stronger US data saw investors dial back bets on a larger start to interest policy easing from the Fed, traders still expect a rate cut at its next meeting, which should boost demand for higher-yielding emerging market assets.
“The rush to seek higher yields in EM territories may subside given the slower easing cycle in the US but there’s no doubt that lower US recession risk will give confidence to invest in EM,” said Charlie Bird, FX trader at Verto.
“Naturally, we expect regions with strong ties to the US to benefit in the medium term, but any global economic positivity will filter through all EM territories.”
Among top performers in Africa, South African stocks jumped 1.1 percent on the day, touching a record high and on pace for weekly gains of 3 percent . The rand rose 0.4 percent , set to continue an eight-day winning streak and for its best week since June.
Thai stocks rose 1 percent after Paetongtarn Shinawatra was selected as the country’s prime minister, replacing SretthaThavisin. The baht edged 0.1 percent lower against the dollar.
