3 weeks ago
Emerging-Market Stocks, Currencies Gain After Soft US Jobs Data
This story is about money and stock markets in many countries.
Some countries' markets are called emerging or developing markets.
On Monday, these emerging markets got good news.
It started with a US report showing fewer jobs than people expected.
That made investors think the US Federal Reserve would not raise interest rates as much.
When that happens, the US dollar gets weaker and money often moves to other countries.
That is why many emerging-market stocks and currencies went up.
Indonesia's money, the rupiah, gained the most.
Everyone is now waiting for new US price data to see what happens next.
Oil prices are also high because of tensions in the Middle East.
Emerging-market stocks and currencies rose after Friday's unexpectedly weak US employment report eased expectations for Federal Reserve rate hikes.
The MSCI gauge of developing-market stocks climbed 0.7%, on track to erase all of last week's losses, while an emerging-market currencies index rose 0.2% for a fourth day of gains.
Indonesia's rupiah led currency gains, and the country's stock benchmark is on track to enter a technical bull market.
Investors now look to US consumer price data due later this week as the key catalyst for the dollar and emerging-market currencies.
Brent crude traded above $84 a barrel as Iran and Oman remained short of a deal to reopen the Strait of Hormuz and Houthi militants claimed an attack on a Saudi refinery near the Red Sea.
- Who
- Emerging-market investors and the Federal Reserve, whose rate-hike expectations eased after the weak US jobs report.
- What
- Emerging-market stocks and currencies gained as expectations for Federal Reserve rate hikes diminished following soft US jobs data.
- Where
- Global emerging markets including Indonesia, with oil markets centered on the Strait of Hormuz and the Red Sea region (Iran, Oman, Saudi Arabia).
- When
- At the start of the new week, following Friday's unexpectedly weak US employment report; US consumer price data is due later this week.
- Why
- The softer US jobs data reduced expectations of Federal Reserve rate hikes, weakening the dollar and drawing investors to emerging-market assets.
Key facts
- MSCI developing-market stocks gauge
- +0.7% on Monday, erasing last week's losses
- Emerging-market currencies index
- +0.2%, heading for a fourth day of gains
- Bloomberg Dollar Spot Index
- Fell 0.4% on Friday, lowest in more than two months
- Brent crude
- Above $84 a barrel
- Currency leader
- Indonesia's rupiah
- MSCI Emerging Markets Index
- Up for August after a two-month loss
- Top contributors to EM stock gains
- Taiwan Semiconductor Manufacturing Co., Delta Electronics Inc., SK Hynix Inc.
- Oil market tensions
- Iran and Oman short of a Strait of Hormuz deal; Houthi militants claimed a Saudi refinery attack
Quotes
Wee Khoon Chong
Senior Asia Pacific market strategist at BNY in Hong Kong
“The strength of emerging‑market currencies is mainly driven by the drop in the US dollar last week, and US CPI this week will be the key catalyst, dictating near‑term evolution of the US dollar and therefore EM currencies.”
livemint.com
Sources
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