EMERGING MARKETS-Shares at 3-month high on hopes of faster economic recovery

  • Reuters
  • Stock Market News
EMERGING MARKETS-Shares at 3-month high on hopes of faster economic recovery
Credit: © Reuters.

* MSCI EM stocks index up for seventh straight session

* Unexpected fall in U.S. unemployment rate fuels recovery hopes

* Dismal China trade data spurs bets of more stimulus

* Asian FX rally could run out of steam - analyst

By Susan Mathew

June 8 (Reuters) - Emerging-market shares extended gains into a seventh session on Monday as investors cheered the prospect of a swift global economic recovery, although dismal China trade data underscored the damage wrought by the COVID-19 pandemic.

MSCI's index of emerging markets shares .MSCIEF climbed 0.2%, hitting its highest in three months and on track for its longest winning streak since April last year. Currencies of most developing markets firmed as the dollar traded steady. FRX/

Confounding expectations, data on Friday showed a fall in U.S. unemployment rate and brought back hopes of a quicker-than-expected economic recovery, propelling Wall Street to near all-time highs. .N MKTS/GLOB

This helped extend a rally in risk assets on increasing business activity worldwide and more stimulus measures from governments and central banks.

"The more robust employment data will boost spending forecasts for May and June," said Stephen Innes, chief global markets strategist at AxiCorp.

"If this actuates in a significant upgrade in retail sales, it will be a massive pump to the markets given much of the recovery's heavy lifting will fall on the consumer. Indeed, based on the (non-farm payrolls) data, it looks like the rebound in spending will be sooner and faster."

But with the full extent of the coronavirus infections and economic damages not known, analysts warn against exuberance.

An index of Asian shares .MAIPJ0000PUS rose 0.2%. Chinese blue-chips .CSI300 climbed 0.5% on hopes of further stimulus after data showed exports contracted in May, while imports fell more than expected. .SS

Shares in Istanbul .XU100 and Moscow .IMOEX rose, but as western European equities retreated from highs, some emerging market bourses in central and eastern Europe slipped .WIG20 .BETI . .EU

Among currencies, South Africa's rand ZAR= stayed near an 11-week high and looked set to mark its sixth straight session of gains. OPEC+ output cuts lifted oil prices, helping crude exporter Russia's rouble RUB= climb back to levels before 2020 lows hit in March. O/R

Most Asian currencies made more muted moves, holding near multi-week highs.

"The weak (Chinese) imports data does put into question the ability of Asian currencies to strengthen further given the growing risks to trade in the region from weaker Chinese and global demand," wrote Mitul Kotecha, senior emerging markets strategist at TD Securities.

Turkey's lira TRY= weakened 0.1% against the dollar as it continued to consolidate following a strong recovery rally from an all-time low hit early in May. The currency has regained more than 6% since then.

For GRAPHIC on emerging market FX performance 2020, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2020, 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

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