Emerging stocks and currencies had a strong start to the year fuelled by solid growth numbers, perky commodity markets and a tepid dollar with equities on track for the best weekly performance since July. MSCI's emerging market index rose 0.4 percent to take weekly gains to 3.4 percent - the best start to a new year since 2006. Asia ex-Japan shares hit a fresh decade high, hovering close to an all-time record led by gains in South Korea.
Risk appetite has been whetted by a run of solid data from both developing and emerging economies, confirming the economic expansion is firmly on track. Thursday's latest US ADP National Employment Report further boosted the mood, showing private employers added a forecast-beating 250,000 jobs in December, and stoking expectations for key US non-farm payroll data out later on Friday.
The upbeat outlook and a tepid dollar also fuelled commodity markets with the Thomson Reuters Core Commodity CRB index at its highest since October 2015 and oil prices holding near the highest levels since May 2015.
"That's providing a macro tailwind for emerging markets - oil and global trade both speak to stronger emerging markets exports and emerging markets growth, which helps lift people's expectations on a whole range of EM assets," said Koon Chow, strategist at UBP. Currencies were trading more mixed on the day but painted an equally upbeat picture for the first trading week of the year.
Turkey's lira and Russia's rouble are on track to end the week around 1 percent stronger against the dollar.
South Africa's rand eyed an eighth straight week of gains - the longest weekly winning streak since late 2002. However, analysts thought the cheer may not last, with the latest Reuters poll showing expectations for the rand to weaken by more than 12 percent by end-2018 as the country's fiscal woes return. Inspired by the benign backdrop, governments continued to tap international capital markets. Overnight, Argentina sold $9 billion in a three-part dollar bond, raising nearly a third of its expected financing needs for 2018 in a deal that was 2.4 times oversubscribed.
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