China stocks rally
Biden visits Kyiv
BIST 100 jumps again
By Sruthi Shankar
Feb 20 (Reuters) – A strong rebound in Chinese equities lifted sentiment across emerging markets on Monday as optimism about an economic recovery outweighed concerns about U.S.-Sino tensions, while investors sought more clues on the U.S. interest rate outlook.
The MSCI EM equities index rose 0.5% after posting three consecutive weeks of declines, spurred by worries about higher U.S. interest rates and tensions between the United States and China.
Heavyweight China stocks closed up more than 2% and the offshore yuan rose marginally after China kept its benchmark lending rates unchanged for a sixth straight month in February, as expected, with some analysts expecting rates to ease further.
A clutch of better-than-expected data recently has suggested economic activity is rebounding as Beijing exited from its stringent zero-COVID strategy in December.
“Macro policy stimulus will likely be announced during the annual session (of the National People’s Congress) and it will be a good timing for the PBoC (central bank) to cut rates and signal that it stands ready to support the economic recovery,” Ulrich Leuchtmann, head of FX and commodity 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 more rate hikes from the Federal Reserve after data signalled resilience in the U.S. economy and elevated inflation.
Trading volumes across markets were light on Monday, with U.S. markets closed for Presidents’ Day.
U.S. President Joe Biden made an unannounced visit to the Ukrainian capital Kyiv on Monday, days before the first anniversary of Russia’s full-scale invasion of Ukraine.
While the war goes on, financial markets have recouped much of their losses at the start of the conflict. The MSCI emerging market eastern Europe equity index has recovered from a hammering to hit a nine-month high in January and has held just below those levels.
The Hungarian forint firmed 0.3% to 382.51 per euro. The currency hit a near 10-month high last week, supported by aggressive domestic rate hikes, while falling gas prices have boosted expectations of a mild recession in the euro zone.
The Czech crown is trading at its strongest level versus the euro since 2008, while the Polish zloty has retraced about half of the declines induced by the war.
Turkey’s equity benchmark jumped 2.8%, having added almost 11.4% in the past three sessions as the market reopened following earthquake-related closure. A series of government measures including tax exemption for share buybacks have aided the market.
Big cement and steel producers were at the top of the BIST 100, advancing almost 10%, on expectations of increasing construction works after the devastating earthquakes.
The lira was just shy of its record low of 18.87 per dollar.
Meanwhile, Turkey expects support from the U.S. Congress to push through a planned $20 billion deal for F-16 warplanes, Foreign Minister Mevlut Cavusoglu said after talks with his U.S. counterpart on Monday. For GRAPHIC on emerging market FX performance in 2023, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2023, see https://tmsnrt.rs/2OusNdX
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