LONDON, Oct 15 (Reuters) - Emerging assets chalked up broad gains on Thursday, helped by the fading prospect of a Federal Reserve interest rate hike wetting investors’ appetite for riskier assets, sending stocks to their highest level in a week and boosting many currencies.
Wednesday’s data showing that U.S. retail sales barely rose in September and producer prices posted their largest fall in eight months sent the dollar to a seven-week low from which it recovered only a sliver on Thursday.
MSCI’s emerging share index snapped a two-day losing streak and jumped some 2 percent with stocks across China ending their session even higher, also helped by rising hopes that a key Communist Party meeting later this month could bring fresh stimulus.
Currencies broadly gained against the dollar with South Africa’s rand and Turkey’s lira both advancing 0.8 percent to their strongest level since August.
“Disappointing figures increased investors’ expectations that the Fed will delay its first hike since 2006 until March next year,” Rabobank analysts wrote in a research note.
“In the EM universe, the high yielders represented by the South African rand and the Turkish lira benefited the most from yet another disappointing set of US data.”
A senior World Bank adviser also said on Thursday that the bank would talk to its members about compensating countries like Turkey for the costs of hosting refugees from Syria for long periods, which could amount to as much 1.4 percent of gross domestic product.
Russia’s rouble shrugged off oil prices nudging lower thanks to the start of the end-of-month tax period with the currency strengthening more than 1 percent while dollar-denominated stocks gained more than 2 percent.
But Kazakhstan’s tenge weakened 0.2 percent after the central bank said it will sell $3 billion dollars by the end of October from the state oil fund on the foreign exchange market rather than its own reserves. The tenge has lost more than a third of its value since the start of the year.
Meanwhile currencies in central and eastern Europe traded flat to weaker against the euro with the Serbian dinar a touch stronger after easing on Wednesday when the central bank cut interest rates for the third time in as many months to revive inflation and support the economy.
In Ukraine, the government announced that a majority of creditors had voted in favour of its debt swap proposal, critical to its $40 billion IMF-led bailout plan, with the exception of Russia which did not participate in voting on Wednesday.
Russia will get another chance at the end of the month to vote on the bill but Kiev could take Moscow to court if it refused to participate, said Prime Minister Arseny Yatseniuk.
For GRAPHIC on emerging market FX performance 2015, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2015, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2015, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2015, see link.reuters.com/zyh97s
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see ) (Reporting by Karin Strohecker; Editing by Tom Heneghan)