EMERGING MARKETS-EM assets at 1-month high; Turkish stocks up ahead of central bank meeting

  • Reuters
  • Stock Market News
EMERGING MARKETS-EM assets at 1-month high; Turkish stocks up ahead of central bank meeting
Credit: © Reuters.

* Turkey rate cut pace to slow in 2020 - analyst

* Russian stocks, rouble near one-month highs

* China stocks down as tariff deadline approaches

By Ambar Warrick

Dec 12 (Reuters) - Emerging market assets jumped to their highest in more than a month on Thursday as the prospect of an accommodative U.S. Federal Reserve pushed money into equities and undercut the dollar.

At its final meeting for 2019, the Fed held on rates and said it was likely to do so in the near term. That helped distract most markets from an impending deadline for further U.S. tariff action against China, which could potentially derail trade talks between Washington and Beijing.

The MSCI's emerging markets stock index .MSCIEF rose as much as 1% to a near five-week high, while the currencies index .MIEM00000CUS added up to 0.3%.

Turkish stocks .XU100 surged ahead of a widely expected interest rate cut by the central bank, its fourth this year, according to a Reuters poll. The bank is expected to trim rates by 150 basis points to 12.5%. expected cut, and three others before it, have been part of an easing cycle to revive the economy from a currency crisis in 2018 that almost halved the value of the lira TRY= at one point.

Turkish inflation has also slowed substantially since the crisis and stood near three-year lows in November, reinforcing expectations for a sizeable policy rate cut at today's meeting.

"Consumer spending is still relatively low, there is no substantial risk that demand-led pressure on inflation may increase significantly in the coming months," said Piotr Matys, an emerging markets FX strategist with Rabobank in London.

The lira strengthened slightly to 5.7933 against the dollar, by 0944 GMT.

"Assuming that the lira stays relatively stable next year, [central bank] Governor Murat Uysal will continue cutting interest rates. The pace of easing (next year) is going to be significantly slower," Matys added.

Russian stocks .IMOEX .IRTS and the rouble RUB= both climbed to near one-month highs, supported chiefly by gains in oil prices as OPEC forecast a supply deficit next year. O/R

South African stocks .JTOPI extended gains into a third straight session, while the rand ZAR= also rose.

Chinese stocks .SSEC were unnerved by the looming U.S. tariff deadline, snapping a 5-day winning streak to end lower. The yuan CNY=CFXS was little changed.

Saudi Arabian stocks .TASI dropped, reversing most of the previous session's gains. State-owned oil behemoth Aramco 2222.SE however, jumped 9%, adding to gains made yesterday during its debut.

Polish stocks WIG20 rose, while the zloty EURPLN= was marginally higher to the euro.

For GRAPHIC on emerging market FX performance 2019, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2019, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

https://tmsnrt.rs/2PChfHx

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