Emerging-Market Stocks Sustain Recovery As Mideast Concerns Ease
Emerging-market stocks rose for a second day as the tensions in the Middle East appeared to ease and data from European economies showed stronger activity.
(Bloomberg) -- Emerging-market stocks rose for a second day as the tensions in the Middle East appeared to ease and data from European economies showed stronger activity.
The benchmark MSCI EM equity index added as much as 0.8% as the dollar eased slightly. That marked a rebound from last week, when stocks erased 2024’s gains, oil prices jumped and traders pushed back Federal Reserve rate cut expectations. Currencies were mixed Tuesday with the Turkish lira, South African rand and the Thai baht registering modest losses.
Euro-area private sector activity advanced to the highest in almost a year and tensions between Iran and Israel eased following a tit-for-tat exchange of attacks last week. Oil prices and US Treasuries steadied, in a sign of calm returning to the market.
“Markets got quite oversold last week driven down by the rally in US rates and noise in the Middle East. EM is always vulnerable to a strong dollar although this time at least the S&P did just as badly,” said Kamil Dimmich, a partner at London-based North of South Capital. With tensions easing in the Middle East and bond markets stabilized, “there’s clearly some buying after the selloff but we’re still along way off the highs,” he added.
Eurobond Offering
Abu Dhabi is offering a dollar deal in its first eurobond offering in about three years as the extra risk premium on EM dollar debt has fallen to 319 basis points from 381 at the start of the year.
UBS Group AG raised its recommendation on a key Chinese stock index to overweight in a rare upgrade call this year, underscoring the tentative optimism that the market is finally on the mend. In another sign of support for Chinese stocks, Mercer LLP, a New York-based investment consultant, said they’re long term bullish on China.
The Hang Seng index added 1.9% on Tuesday, heading for its biggest gain in three weeks.
“Chinese technology stocks, particularly Hang Seng listed ones, are attracting investor interest owing to valuation and stabilization of earnings outlook,” said Kumar Pandit, a money manager at Polen Capital UK LLP.
More stories like this are available on bloomberg.com
©2024 Bloomberg L.P.