(Bloomberg) -- Emerging-market stocks rallied Thursday, rebounding from four straight sessions of losses, as this week’s surge in US tech shares spread to the developing world.
The MSCI EM stock Index gained as much as 1.6%, the most intraday since Aug. 16, with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. among the main drivers. Nvidia leans heavily on TSMC for production of its most important chips, Chief Executive Officer Jensen Huang said on Wednesday, adding that the company is experiencing strong demand for its latest generation of products.
“Asian equity markets are rallying for the first time this week and being fueled by a tech rally,” Jim Reid, a strategist at Deutsche Bank AG, wrote in a note.
Before today, the recent risk-off shift on Wall Street had hit emerging markets disproportionately, sending shares in the benchmark developing-world equity index to an all-time low against the S&P 500.
The MSCI gauge tracking developing-world currencies was little changed Thursday, reversing earlier losses as the Chilean peso, the Colombian peso and the Hungarian forint led gains. A rise in commodity prices boosted currencies across Latin America.
Currencies edged higher after US producer prices data for August left expectations for interest rate cuts intact for next week’s Federal Reserve meeting.
“Fundamentals are not deteriorating and economies are performing relatively well,” said Juan Perez, director of trading at Monex USA. “The MSCI EM Currency Index is currently less than half a percent away from its record-best of all time so not far for those with appetite to bet on a return or even improvement to a fresh new high.”
The US producer price index for final demand increased 0.2% from a month earlier after a downward revision to July’s reading, the Bureau of Labor Statistics said Thursday. The median forecast in a Bloomberg survey of economists called for a 0.1% gain.
Treasury yields were little changed after the data, while the dollar fell as investors maintained bets on a quarter-point interest-rate cut next week.
In China, stocks fell to the lowest since January 2019, a grim reflection of how investors have lost faith over a recovery in the country’s earnings and economy. The CSI 300 Index closed down 0.4% on Thursday, taking its slide since a May high to around 14%.
Maldives bonds are on track for the best performance among emerging-market peers this month, according to data compiled by Bloomberg, as the country’s monetary authority said the government will make a coupon payment on dollar Islamic bonds due on Oct. 8. The statement appeared to at least temporarily soothe investor concern that the nation was hurtling toward the world’s first sukuk default.
In South Africa, inflation expectations for the next two years edged closer to the 4.5% midpoint of the central bank’s target range, reinforcing the case for interest rate cuts to start this month.
