Sailing-Winds of change for America's Cup in Bermuda Triangle
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LONDON, March 17 Emerging equities were set on Friday for their strongest week since July 2016, up more than 4 percent and trading near 20-month highs after a dovish Fed, whilst the Turkish lira was at a three-week high after central bank tightening.
MSCI's emerging equity index was rounding off its strongest week in eight months after the U.S. Federal Reserve signalled gradual policy tightening ahead, reassuring investors who had feared a more hawkish stance.
"The risk scenario people were looking at, that they could signal a more hawkish path, did not come to fruition ... and this has basically given a green light to buy emerging markets," said Kiran Kowshik, emerging markets FX strategist at UniCredit.
Improving global growth, higher commodity prices, fiscal stimulus in China and better Chinese industrial activity had also encouraged investors, he said.
The bullishness was evident in bond markets, where average yield spreads on emerging dollar debt over U.S. Treasuries narrowed to 307 basis points (bps) from 316 bps before the Fed's 15 meeting.
JPMorgan said that having been underweight emerging market debt after the U.S. presidential elections, it had been adding risk. "With the (Fed) hurdle cleared we now take off the last of our emerging market FX hedges to leave us with a small EM currency overweight position," the bank told clients.
Some of the biggest stock market gains came in Asia, where Indian shares hit fresh record highs after ministers cleared key draft bills for a national sales tax. Korea and Taiwan also hit multi-month highs.
China was the exception, losing 1 percent for their worst day in three months. Losses were led by sectors exposed to higher borrowing costs after the central bank followed the Fed in raising rates.
Most Asian currencies were also set for big weekly gains, with the Taiwan dollar posting its best week in more than five years.
In emerging Europe, Russia and Poland were both up 4 percent for the week, the latter enjoying its best weekly performance since December 2016.
The Turkish lira outperformed, firming 0.5 percent after the central bank's Thursday meeting pushed up the average cost of funding by 50 basis points.
The lira is up 3.5 percent this week, its best performance since early February.
"With the dollar weakening, it is possible that the lira will do well over the next couple of weeks … but this could also provide a selling opportunity," Unicredit's Kowshik said.
On bond markets, new issues came thick and fast, with Russia's Gazprom raising $750 million 10-year bond at 4.95 for its first dollar deal since November 2014. Foreign funds bought 75 percent of the deal
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see)
Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg
Morgan Stanley Emrg Mkt Indx 965.18 +1.98 +0.21 +11.93
Czech Rep 983.94 +3.16 +0.32 +6.76
Poland 2291.89 +8.19 +0.36 +17.66
Hungary 32864.92 -184.52 -0.56 +2.69
Romania 7962.27 +38.45 +0.49 +12.38
Greece 637.30 +1.17 +0.18 -0.99
Russia 1101.89 +5.60 +0.51 -4.38
South Africa 45305.87 -217.25 -0.48 +3.20
Turkey 90169.64 -98.68 -0.11 +15.40
China 3237.31 -31.62 -0.97 +4.31
India 29649.87 +64.02 +0.22 +11.35
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.00 27.01 +0.02 +0.03
Poland 4.30 4.31 +0.01 +2.30
Hungary 309.63 309.46 -0.05 -0.26
Romania 4.56 4.55 -0.16 -0.58
Serbia 123.86 123.90 +0.03 -0.41
Russia 57.89 57.82 -0.11 +5.84
Kazakhstan 315.49 317.09 +0.51 +5.76
Ukraine 26.90 26.95 +0.19 +0.37
South Africa 12.78 12.75 -0.22 +7.44
Kenya 103.00 102.90 -0.10 -0.61
Israel 3.63 3.63 -0.07 +6.08
Turkey 3.61 3.62 +0.31 -2.37
China 6.90 6.90 -0.12 +0.58
India 65.53 65.36 -0.25 +3.69
Brazil 3.12 3.12 -0.08 +4.25
Mexico 19.21 19.26 +0.26 +7.82
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 328 -1 .03 61.48
(Additional reporting by Karin Strohecker; Editing by Hugh Lawson)
June 23 The U.S. Marine Corps said on Friday it resumed flight operations for Lockheed Martin Corp's F-35B fighter jets after temporarily suspended operations a day ago because of software problems.