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Stocks rally in China
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Biden visits Kyiv
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BIST 100 jumps again
By Sruthi Shankar
Feb 20 (Reuters) – A strong rebound in Chinese equities lifted sentiment in emerging markets on Monday, as optimism about an economic recovery outweighed worries about US-China tensions, while investors looked for further clues about US looking for interest rate prospects.
The MSCI EM stock index rose 0.5% after posting three consecutive weeks of declines, spurred by concerns over higher US interest rates and tensions between the United States and China.
Heavyweight Chinese stocks closed more than 2% and the offshore yuan edged higher after China kept interest rates unchanged in February for the sixth straight month as expected, with some analysts expecting another rate cut.
A string of better-than-expected data recently suggested economic activity is recovering as Beijing abandoned its strict zero-COVID strategy in December.
“Macropolicy stimulus will likely be announced during the annual meeting (of the National People’s Congress) and it will be a good time for the PBoC (central bank) to cut interest rates and signal that it is ready to support the economic recovery,” Ulrich Leuchtmann, head of FX and commodities research at Commerzbank, said in a note.
After an upbeat start to the year, EM assets have come under pressure in recent weeks as investors priced in further rate hikes from the Federal Reserve after data signaled US economic resilience and elevated inflation.
Trading volumes in the markets were light on Monday as US markets were closed for President’s Day.
US President Joe Biden paid an unannounced visit to the Ukrainian capital of Kiev on Monday, days before the first anniversary of Russia’s full-scale invasion of Ukraine.
As the war rages on, financial markets have recouped much of their losses at the start of the conflict. The MSCI Emerging Markets Eastern Europe Equity Index rebounded from a hammer to hit a nine-month high in January and has held just below those levels.
The story goes on
The Hungarian forint strengthened by 0.3% to 382.51 per euro. The currency hit a near 10-month high last week, helped by aggressive domestic rate hikes, while falling gas prices fueled expectations of a mild euro-zone recession.
The Czech koruna is at its strongest against the euro since 2008, while the Polish zloty has recouped about half of war-related losses.
Turkey’s equity benchmark rose 2.8% after gaining nearly 11.4% over the past three sessions as the market reopened following the earthquake-related shutdown. A number of government measures, including tax exemptions for share buybacks, have supported the market.
Major cement and steel makers topped the BIST 100, gaining nearly 10% on expectations of increased construction activity following the devastating earthquakes.
The lira narrowly missed a record low of 18.87 per dollar.
Meanwhile, Turkey awaits US Congress support to push through a proposed $20 billion deal for F-16 fighter jets, Foreign Minister Mevlut Cavusoglu said after talks with his US counterpart on Monday. For a 2023 Emerging Markets FX performance CHART, go to http://tmsnrt.rs/2egbfVh. For a 2023 MSCI Emerging Index performance CHART, go to https://tmsnrt.rs/2OusNdX
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For the Russian market report see (Bengaluru reporting by Sruthi Shankar; Editing by Savio D’Souza)
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