By Susan Mathew
Sept 6 (Reuters) – A rally in China shares pushed an index of emerging market shares to six-week highs on Monday, while a dollar lingering near one-month low gave a lift to emerging currencies.
MSCI’s Asia-heavy gauge of EM shares rose 0.6% as Chinese blue-chips rose almost 2% as the country’s plan to set up a new stock exchange in Beijing boosted hopes of support to technologically innovative small- and medium-size enterprises.
Overall optimism was high as weak U.S. jobs growth numbers increased risk appetite as it signalled the Federal Reserve may not rush to taper stimulus. Indian stocks hit record highs.
“Friday’s U.S. employment data substantially lowered the risks of a Fed taper this year, which is playing out well in Asian equity markets this morning,” said Jeffrey Halley, senior market analyst, Asia Pacific, OANDA, adding that heightened expectations of stimulus given weak data out for Japan and China last week also keep sentiment buoyed.
Volumes are likely to be lower than usual with U.S. markets shut for a holiday.
Western European indexes also opened higher, bolstering gains for EM bourses trading in European hours. Russia’s MOEX scaled new peaks, up 0.3%, while South Africa’s top 40 companies index snapped a three-day losing streak.
South Africa’s rand lifted off one-month lows, up 0.4%, ahead of GDP data on Tuesday, while Turkey’s lira firmed 0.6% after taking a hit on Friday as a surge in inflation above the benchmark interest rate to 19.25% left investors speculating about the bank’s move later this month.
Turkey expects its annual inflation rate to fall to 9.8% at the end of 2022, from 16.2% at the end of this year, according to the government’s medium-term forecasts. Economic growth is seen at 9% this year before dropping to 5% next year.
Crude exporter Russia’s rouble lagged as oil prices slid after the world’s top exporter Saudi Arabia slashed crude contract prices for Asia.
Russian inflation data is due on Wednesday, followed by an expected rate hike by the central bank on Friday.
Meanwhile, a coup in bauxite-mining hub Guinea saw aluminium prices rise, sending a number of aluminium related stocks such as Russia’s Rusal up 4.5% on the Moscow exchange and 15% on the Hong Kong exchange.
Soldiers appeared on Sunday to have ousted Guinea’s long-ruling president, telling the nation they had dissolved its government and constitution and closed its land and air borders. Guinea’s franc currency is up 2% so far this year
For GRAPHIC on emerging market FX performance in 2021, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see tmsnrt.rs/2OusNdX