LONDON, Nov 16 (Reuters) - Emerging stocks snapped a five-day losing streak on Thursday as investors found solace from solid U.S. data in the wake of the recent global equity sell off while currencies advanced despite a slightly stronger dollar.
MSCI’s emerging market index rose 0.9 percent thanks to solid gains in Asian heavyweight bourses Hong Kong and Seoul, and Chinese mainland stocks.
Emerging Europe also opened higher, with Hungary leaping 1.2 percent, and Turkey and the Czech Republic up 0.8 percent.
The broad-based move higher came after U.S. data showed a rise in core inflation, bolstering the view that a recent disinflationary trend worrying the U.S. Federal Reserve had probably come to an end. A rise in retail sales also showed consumer spending was cruising at a healthy clip.
This confirmed expectations that the Fed would not only hike in December -- which is now almost fully priced in -- but multiple times next year as well.
“Markets have caught a breather -- the inflation data from the U.S. came in line with what was expected and markets are fully priced for a Fed hike in December,” said Kiran Kowshik, a strategist at UniCredit.
“U.S. Treasury prices are rallying, so yields are going down, and that provides a bit of a breather for emerging markets.” U.S. 10-year yields edged higher on Thursday but were still lower than recent peaks.
However, Saudi Arabian stocks remained under pressure, easing 0.4 percent on the day, having lost more than 4 percent since the start of the year. Some other bourses across the Gulf region also headed lower.
Since the announcement of Saudi’s anti-corruption probe at the start of last week, state-linked funds have been buying stocks towards the close of each day to prevent Riyadh’s market from falling significantly, asset managers say.
However, this petered out on Wednesday, when the funds’ activity appeared to decrease, raising concerns that the bourse may be vulnerable to more selling.
Political tensions across the region remain high, with top Lebanese officials accusing Riyadh of holding its Prime Minister Saad al-Hariri hostage, while France’s President Emmanuel Macron has invited Hariri and his family to come to France.
Lebanon’s dollar-denominated bonds were mainly lower across the curve, with the 2028 issue down 1.4 cents but still off the lows it hit on Nov. 10 according to Thomson Reuters data.
Lebanon five-year credit default swaps also rose 4 basis points (bps) from Wednesday’s close to 598 bps, still some way off the Nov. 10 peak.
Despite the dollar firming against a basket of currencies , many emerging currencies traded stronger.
South Korea’s won chalked up some of the biggest gains, strengthening 0.7 percent against the dollar to its highest since September 2016, and taking its annual gains to nearly 10 percent.
However, a finance ministry official in charge of currency markets said the won’s gain had been excessive, and warned that policymakers were monitoring it closely.
Mexico’s peso recovered 0.45 percent against the greenback, after falling to an eight-month low on Wednesday as a lack of progress in NAFTA talks frayed investors’ nerves.
Russia’s rouble firmed 0.6 percent, lifted by stronger oil prices and companies buying roubles to make local tax payments. South Africa’s rand also strengthened 0.8 percent and Turkey’s lira firmed 0.5 percent.
In emerging Europe the Czech crown rallied 0.4 pecent against the euro and the Polish zloty firmed 0.2 percent.
Venezuelan sovereign and PDVSA bonds were mainly firmer across the curve after Venezuela won easier debt terms from Russia and got a vote of confidence from China, as the oil-rich country said it had started making interest payments on bonds.
Sovereign dollar bonds rose up to 2.5 cents and PDVSA bonds up to 4 cents according to Thomson Reuters data.
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For RUSSIAN market report, see) Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg
Morgan Stanley Emrg Mkt Indx 1121.18 +10.06 +0.91 +30.03
Czech Rep 1060.86 +7.98 +0.76 +15.11
Poland 2425.74 +6.78 +0.28 +24.53
Hungary 39134.09 +518.98 +1.34 +22.28
Romania 7700.53 -31.01 -0.40 +8.69
Greece 713.70 -5.10 -0.71 +10.88
Russia 1115.18 -1.35 -0.12 -3.22
South Africa 53300.56 +296.39 +0.56 +21.41
Turkey 08648.22 +931.71 +0.86 +39.05
China 3399.86 -2.66 -0.08 +9.54
India 33083.21 +322.77 +0.99 +24.25
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 25.55 25.64 +0.37 +5.72
Poland 4.23 4.24 +0.15 +4.02
Hungary 311.95 312.09 +0.04 -1.00
Romania 4.63 4.64 +0.03 -2.14
Serbia 118.32 118.36 +0.03 +4.25
Russia 59.84 60.22 +0.64 +2.38
Kazakhstan 332.36 332.76 +0.12 +0.39
Ukraine 26.47 26.48 +0.04 +2.00
South Africa 14.27 14.38 +0.79 -3.76
Kenya 103.65 103.65 +0.00 -1.23
Israel 3.53 3.53 +0.03 +9.18
Turkey 3.86 3.88 +0.49 -8.67
China 6.63 6.62 -0.13 +4.74
India 65.17 65.26 +0.14 +4.26
Brazil 3.31 3.31 +0.00 -1.81
Mexico 19.16 19.25 +0.44 +8.11
Debt Index Strip Spd Chg %Rtn Index
Sov‘gn Debt EMBIG 323 -3 .05 7 97.47 1
Reporting by Karin Strohecker and Claire Milhench; Editing by Toby Chopra