Emerging Markets Stocks Rally as Trade Talks Boost Sentiment
(Bloomberg) -- Stocks in developing nations climbed on Monday, with the index closing at its highest in three weeks, as sentiment over trade talks between the US and its partners improved.
The gauge gained 0.5%, finishing the day at the highest level since President Donald Trump presented his reciprocal tariffs on April 2. The MSCI Index leaped 2.7% last week.
'Positive comments by US Treasury Secretary Scott Bessent about trade deals coming from the US is offering EM assets support,' said Elias Haddad, a strategist at Brown Brothers Harriman & Co.
Monday's gains also put the EM stocks index above its 200-day moving average. If the gauge ends April with an advance, that would mark a gain in each of the first four months of a year — a feat last achieved in 2019. Earnings estimates for the gauge have risen 0.8% this month, the most since August.
For Michael Brown, a senior research strategist at Pepperstone Group Ltd, the recent EM rally has been largely driven by the broad 'sell America' trade amid policy uncertainty from Trump. Those countries that reach trade deals with the US — which result in a permanent lowering of tariffs — are likely to outperform peers.
Meanwhile, in the foreign exchange market currencies were mostly up. The MSCI currency index rose just 0.08% amid a sinking dollar, which fell over 0.5% during the trading session. The South African rand and the Hungarian forint led the gains in the emerging basket, while the Chilean peso lagged its peers, down as much as 1.1%.
Earlier, assets in Colombia dropped after the International Monetary Fund paused access to an $8.1 billion flexible credit line. The country's peso plunged as much as 0.9% while its dollar bonds fell across the curve, with notes maturing in 2035 down 1 cent to about 100 cents on the dollar. The peso closed little changed.
Hopes have grown that the worst of the US tariff threat may be passing after Treasury Secretary Scott Bessent said last week that the US and South Korea could reach an 'agreement of understanding' on trade as soon as this week. Bessent said Sunday that negotiations with some trading partners 'are moving along very well, especially with the Asian countries.'
Traders this week will also be watching for key US data including growth and a gauge of inflation to assess if Trump's trade war has begun to affect the economy. Meanwhile, Chinese officials Monday reiterated a pledge to aid growth ahead of the release of factory activity data later this week.
'Overall we expect US data to show signs of a cooling labor market, but not falling off a cliff,' said Dan Pan, an economist at Standard Chartered Bank.
On Monday, Angola's bonds rallied for some of the biggest gains in emerging markets. The country held talks with the International Monetary Fund last week about possible financing packages, its finance minister said, after trade wars and a slump in energy prices effectively shut the oil producer out of international bond markets.
Bulgaria tapped international markets, selling Eurobonds for the first time this year. The country is issuing a total of €4 billion ($4.5 billion) in bonds, its biggest ever haul of euro-denominated debt in a single day, to fund its growing budget deficit in preparation for euro adoption.
--With assistance from Michael G. Wilson.
More stories like this are available on bloomberg.com
First Published: 29 Apr 2025, 05:39 AM IST
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hans India
12 minutes ago
- Hans India
Middle East flares may weigh down markets
Pumped up by US President Trump's statement about decision of US direct involvement in the Israel-Iran conflict in next two weeks, the strong rally on Friday helped market erase previous few sessions losses to close on optimism. For the week, the BSE Sensex index added 1,289.57 points or 1.58 per cent to finish at 82,408.17, and on the NSE, the Nifty gained 393.8 points or 1.59 per cent to end at 25,112.40. Broader markets underperformed benchmark indices, the BSE Mid-cap Index was down 0.4 per cent and the BSE Small-cap index shed nearly 2 per cent. Sector wise, Nifty Private Bank index rose 1.6 per cent, Nifty Auto index added 1.5 per cent, Nifty Information Technology index rose 1.3 per cent. However, Nifty Media index shed 3 per cent and Nifty Pharma index fell 1.7 per cent, Nifty Metal and PSU Bank indices shed 1.3 per cent each. FIIs snapped four week selling with purchases of equities worth Rs 8,709.60 crore in current week. DIIs continued their buying for ninth straight week with purchases of equities worth Rs 12,635.58 crore. Domestic factors such as a decline in India's wholesale inflation and the RBI's relaxation of lending norms supported the market's upward momentum amid Middle East concerns. The rupee witnessed a sharp fall last week. The fall to 86.60 on the Indian rupee (86.59) has happened much faster than expected. Rise in crude oil prices on the back of the ongoing Israel-Iran conflict is weighing on the domestic currency. The US Federal Reserve meeting last week largely turned out to be a non-event for the markets. The Fed kept the rates unchanged at 4.25-4.5 per cent. It also retained its forecast for another 50-basis points rate cuts for the rest of the year. However, the central bank had revised its inflation forecast higher. The higher revision has been attributed to the uncertainty prevailing over the impacts of higher tariffs. Weekend factors like US B-2 Bombers making incursions into Iran and with Israel and Iran continuing to exchange missile strikes will cast shadow on markets when markets open in the coming week. Looking ahead, traders may brace for heightened volatility as geopolitical tensions remain elevated. Iran has launched a retaliatory wave of missiles toward Israel, hours after U.S. airstrikes targeted its nuclear facilities in Fordow, Natanz, and Isfahan; and Iran's foreign minister stated that Tehran is willing to consider diplomacy only once Israel halts its aggression. Watch carefully the developments because of its impact on international crude oil prices. IPO Corner: After a long time, the primary market is going to see some intense action in a 'energetic week' with 13 (IPOs) hitting the D-Street. The companies will be raising nearly Rs 16,000 crore during the week, with five mainboard public issues up for grabs. The positive broader picture of the equity market, despite near-term concerns led by the Middle East and tariff-driven volatility, appears to be the reason for strong primary market action. Mumbai-based real estate developer Kalpataru is slated to raise Rs 1,590 crore via IPO. The IPO price band has been set at Rs 387 to Rs 414. New Delhi-headquartered EPC company Globe Civil Projects plans to garner Rs 119 crore through IPO. The IPO price band has been set at Rs 67 to Rs 71. Industrial gases provider Ellenbarrie Industrial Gases plans to mop up Rs 852.53 crore via the public issue. The IPO price band has been set at Rs 380 to Rs 400. Electric resistance welded steel pipes and structural tubes maker Sambhv Steel Tubes plans to raise up to Rs 540 crore. However, the biggest public issue of the current year will be from HDB Financial Services with a size of Rs 12,500 crore. The IPO price band has been set at Rs 700 to Rs 740. This remains the most anticipated issue among the pack. The SME segment will also see top action with 7 IPOs opening for subscription. Reports indicate that Tata Capital is closing in on a blockbuster Rs 17,200 crore IPO, after receiving regulatory clearance for its confidential draft prospectus. Expect some shift in fund flows from both retail investors and institutions from secondary market to IPO segment. The fresh wave of equity supply via initial public offerings (IPOs) can be a key risk to Indian stock market. If you think investing is gambling, you're doing it wrong. The work involved requires planning and patience. However, the gains you see over time are indeed exciting. FUTURES & OPTIONS / SECTOR WATCH With the broader indices Nifty and Bank Nifty locked in a tight range, derivative segment witnessed mild bouts of alternate buying and selling in stock futures. Despite ongoing tensions between Iran and Israel, indices ended the week on a positive note. In the options market, prominent Call open interest for Nifty was seen at the 25,500 and 25,300 strike, while the notable Put open interest was at the 25,000 and 24,800 strike. For Bank Nifty, the prominent Call open interest was seen at the 57,000 and 56,500 strikes, whereas notable Put open interest was at the 56,000 strike. Implied volatility (IV) for Nifty's Call options settled at 13.51%, while Put options concluded at 14.06%. The India VIX, a key market volatility indicator, closed the week at 14.26%. The Put-Call Ratio Open Interest (PCR OI) for the week was 1.06. Nifty is currently trading near its resistance level of 25,200. A breakout above this level could lead to a further move towards 25,500. On the downside, immediate support is placed at the psychological level of 25,000, followed by strong support at 24,800. As long as Nifty holds above 24,800, the market can be considered a buy-on-dips. Watch out for breakout attempts near resistance and potential reversal signs around the key levels. As always, manage risk with discipline and stay anchored to price confirmation. Stocks looking good are Ashok Leyland, BEL, Bharti Airtel, Indus Towers, Trent, Kaynes and Wipro. Stocks looking weak are ATGL, Bluestar, RVNL, Shree Cements, Tata Chemicals, Unominda and Voltas. (The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)
Economic Times
16 minutes ago
- Economic Times
Indian rupee, bonds under pressure as US strike on Iran deepens Middle East conflict
The Indian rupee and government bonds are poised to face pressure this week following a U.S. strike on Iran, raising concerns of higher oil prices and potential retaliation that could deepen the conflict in the Middle East. ADVERTISEMENT The rupee had closed at 86.5850 against the U.S. dollar on Friday, down 0.6% on the week. U.S. President Donald Trump said late on Saturday that the country had struck Iran's main nuclear sites, aligning with an Israeli offensive in a significant escalation of the ongoing Middle East tensions. Tehran called the attack a grave violation of international law and vowed to defend itself. In a televised address, Trump warned Iran against retaliating, stating that any response would trigger further attacks unless Iran agreed to pursue peace. Concerns over a potential escalation of the conflict had already driven oil prices higher this month, and analysts now anticipate an additional increase of $3 to $5 per barrel in reaction to the U.S. strikes. ADVERTISEMENT Brent crude oil futures closed at $77 per barrel on Friday, up nearly 4% on week. Elevated energy prices are a pain point for the Indian rupee and government bonds, as oil is a major component of India's import bill. ADVERTISEMENT A "flight to safety is likely to reinforce the dollar's strength against the Indian rupee and other major currencies," said Dilip Parmar, a foreign exchange research analyst at HDFC Securities. The rupee could weaken towards 87.50 in the near-term, Parmar added. Traders reckon that the Reserve Bank of India would likely step in to curb excessive volatility. ADVERTISEMENT The rupee may find immediate support around 87.50-87.60 but will remain acutely sensitive to developments in the Middle East, said a trader at a state-run bank. Foreign portfolio flows related to a upcoming large IPO alongside remarks from U.S. Federal Reserve Chair Jerome Powell, scheduled for Tuesday, will be among other cues in focus for the rupee this week. ADVERTISEMENT Meanwhile, India's 10-year benchmark 6.33% 2035 bond yield ended at 6.3087% on Friday. Traders expect it to move in a range of 6.30% to 6.40% this week. "A $10 per barrel rise in crude could widen India's current account deficit by 0.3% of GDP and elevate inflation, eroding real yields," CR Forex said. Earlier this month, the RBI reduced its inflation forecast for the current fiscal year to 3.7% and cut its key lending rate by a steeper-than-expected 50 basis points. A big rate cut would assure stakeholders of India's focus on economic growth and aid in faster transmission, members of rate setting panel wrote in the June policy minutes. However, it reverted to a "neutral" stance from "accommodative", prompting analysts to forecast an end to the monetary easing cycle. "International uncertainties make RBI think it is necessary to front load the monetary easing to boost growth. But RBI may take longer to see the impact before implementing another cut going forward. Looking forward, we see RBI to stay on hold for next few months, said Alaa Bushehri, head of emerging market Debt, BNP Paribas Asset Management. KEY EVENTS: ** June HSBC India manufacturing, services and composite Flash PMI - June 23, Monday (10:30 a.m. IST) U.S. ** June S&P Global manufacturing, services and composite Flash PMI - June 23, Monday (7:15 p.m. IST) ** May existing home sales - June 23, Monday (7:30 p.m. IST) ** June consumer confidence - June 24, Tuesday (7:30 p.m. IST) ** May new home sales units - June 25, Wednesday (7:30 p.m. IST) ** May durable goods - June 26, Thursday (7:30 p.m. IST) ** January-March GDP final - June 26, Thursday (6:00 p.m. IST)(Reuters poll -0.2%) ** Initial weekly jobless claims for week to June 16 - June 26, Thursday (6:00 p.m. IST) ** May personal consumption expenditure index, core PCE index - June 27, Friday (6:00 p.m. IST) ** June U Mich sentiment final - June 27, Friday (7:30 p.m. IST)
Time of India
16 minutes ago
- Time of India
Oil routes wobble: Two tankers turn back from Hormuz as US strikes on Iran raise fears of wider conflict
Two supertankers , each capable of carrying around 2 million barrels of crude oil, made a U-turn in the Strait of Hormuz after US airstrikes on Iran triggered fears of retaliation that could affect commercial shipping through the region, Bloomberg reported. The Coswisdom Lake and South Loyalty had both entered the key waterway before abruptly reversing course on Sunday, according to vessel tracking data compiled by Bloomberg. The two empty tankers then sailed south, away from the entrance to the Persian Gulf. Although jamming of ship signals and electronics in the Persian Gulf has increased since Israeli airstrikes on June 13, the movement and subsequent turnarounds of the two vessels resemble routine tanker behaviour rather than irregular incidents. Also Read: Iran is considering closing Strait of Hormuz after US strikes nuclear sites: Reports Despite signal interference and attempts by ships to stay further away from the Iranian coastline, oil and gas tankers have continued transiting the strait following the US airstrikes. However, the decision by the Coswisdom Lake and South Loyalty to turn back marks the first indication of possible re-routing. Live Events Vessel owners and oil traders are now watching closely for signs that the broader conflict in the Middle East could begin to influence shipping flows. Earlier on Sunday, the Greek shipping ministry issued a notice advising its vessels to reassess voyages through Hormuz and instead take shelter in safe ports until the situation stabilises. Also Read: West Asia tensions may choke LPG supplies The United States launched one of its largest aerial attacks in decades on Sunday, striking Iran's key nuclear sites at Fordow, Natanz, and Isfahan. US Defence Secretary Pete Hegseth confirmed that the operation—named Operation Midnight Hammer—was 'an incredible and overwhelming success,' carried out on the direct orders of President Donald Trump . Following the strikes, Iran is now considering the option of shutting down the Strait of Hormuz, according to a EuroNews report published on Sunday. The strait is one of the world's most vital maritime chokepoints for oil shipping. Commercial satellite images suggest the US attack may have severely damaged—or even destroyed—the underground Fordow nuclear facility and the centrifuges used for uranium enrichment. However, experts said on Sunday there was no official confirmation yet. Also Read: Operation Midnight Hammer: How the US bombed Iran's nuclear sites without being detected Sardar Esmail Kowsari, a commander in Iran's Islamic Revolutionary Guard Corps and a member of parliament, told local media that closing the Strait of Hormuz 'is under consideration,' and added, 'Iran will make the best decision with determination.' Given the rising tensions, vessels might now prefer to wait outside the strait rather than proceed to their designated loading ports if delays are expected upon arrival. Even before the weekend attacks, benchmark tanker earnings had risen by nearly 90%. On Sunday night, freight derivatives appeared to surge, reflecting expectations of disruption. EuroNews also reported that, in case of further escalation, Iran could use its short- and medium-range missiles to target oil platforms and pipelines in the strait, or launch attacks on commercial ships. Surface-to-surface missiles could be aimed at tankers or coastal facilities, while drones and airstrikes could potentially disable radar and navigation systems at major terminals.
