LONDON: Emerging stocks surged on Wednesday, tracking gains on Western markets for their biggest daily rise in eight weeks, though currencies broadly fell, with the Turkish lira slipping from two-week highs.
MSCI's emerging market index jumped 1.6 percent to a one-week high, with Asian and European bourses booking solid gains and Russian dollar-stocks up more than 2 percent.
Upbeat US home sales, coming on the heels of a raft of positive data, reinforced investors' positive view on the health of the world's largest economy, driving US equities sharply higher overnight and pushing oil prices close to $50 per barrel.
But Turkish assets got a reality check after sharp gains following the unveiling of a new cabinet by Prime Minister Binali Yildirim. This confirmed key members of the economic management team including Deputy Prime Minister Mehmet Simsek, favoured by foreign investors as a reformer.
"The market welcomed Simsek but my concerns are first he has been in a high profile position for a while and made the right noises but hasn't been able to push through major reforms," said William Jackson, senior economist at Capital Economics.
"The rest of the cabinet seems to be (President Tayyip) Erdogan loyalists and the new PM seems more malleable to Erdogan's desires."
Turkish stocks slipped 0.5 percent and the lira weakened 0.2 percent against the dollar.
Finance Minister Naci Agbal, reappointed to the new cabinet, told Reuters in an interview that a presidential system would make it easier for the government to take decisions, pledging to be "swift and bold" on economic policy.
Other emerging currencies fared little better, with South Africa's rand slipping 0.4 percent and Russia's rouble trading flat as the hovering of the dollar close to an eight-week high took its toll.
Central European bourses rose, with Polish stocks jumping 1.3 percent to a one-week high. In the Czech Republic, President Milos Zeman officially named his long-time ally and economic adviser Jiri Rusnok as the next central bank governor, putting him in a position to lead debate on the expected exit next year from a crown cap regime.
Nigerian dollar/naira non-deliverable forwards (NDFs) gained across the curve - indicating mounting pressure for a devaluation - after the central bank said on Tuesday it would adopt a flexible foreign exchange rate regime in a policy U-turn .
However, there was uncertainty over how the change from a de facto naira peg to the dollar would be implemented, as the central bank plans to publish details only in a few days.
Comments
Comments are closed for this article.