EMERGING MARKETS-Shares, currencies gain as markets turn focus to Fed

  • Reuters
  • Stock Market News
EMERGING MARKETS-Shares, currencies gain as markets turn focus to Fed
Credit: © Reuters.

* MSCI EM shares index up for ninth session

* Fed expected to address rising U.S. treasury yields; dollar down

* Russian rouble up as oil rises; room for more rate cuts- cbank

* Turkish unemployment falls, lira up after five sessions

By Susan Mathew

June 10 (Reuters) - Emerging market shares on Wednesday were set to post their longest winning streak in more than a year, while the currencies firmed as the dollar weakened amid a cautious mood ahead of the U.S. Federal Reserve's verdict on the health of the economy.

Investors await to see if the U.S. Fed reinforces the upbeat tone set by the latest prospects of economic recovery. Amid speculation that it might take measures to curb a recent steepening of the U.S. yield curve, the greenback weakened broadly. FRX/

MSCI's index of developing world currencies .MIEM00000CUS held near three-month highs.

"We fully expect that the Fed will be as dovish as necessary to avoid a mini 'taper-tantrum', keeping the peak-virus trade nicely on track," said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA, but noted that a deeper correction cannot be ruled out.

The Fed statement is expected at 1800 GMT, followed by a news conference by Fed Chair Jerome Powell.

The Chinese yuan CNY= traded flat at 7.07 to the dollar, while the South Korean won KRW= firmed about 0.7%

In the interbank market, Russia's rouble RUB= strengthened 0.3% despite the drop in crude prices, but the currency struggled to hold gains on the local exchange RUBUTSTN=MCX . Lower inflation has given the central bank room to further cut its benchmark interest rate, Governor Elvira Nabiullina said on Wednesday. O/R

The Turkish lira TRY= - an underperformer in the recent risk rally - snapped a five-session decline after unemployment fell on a month-on-month and annual basis. President Tayyip Erdogan said he would provide incentives to boost employment and the economy. equities, the EM stock benchmark .MSCIEF rose for a ninth straight session, up 0.5%, though the underlying picture was mixed.

China mainland stocks .SSEC .CSI300 slipped after data showed a deepening deflation in producer prices, signalling a prolonged impact on overseas demands and casting doubts over how swift an economic recovery could be. .SS

Heavyweight South Korea .KS11 gained 0.3% despite data showing unemployment surged to its highest in a decade, while Taiwan shares .TWII hit their highest in more than three months after a ban on equities' short-selling was lifted early. Turkey shares .XU100 rose 0.8%, while Russia's index .IMOEX fell 0.5%.

Within the EM stocks space, Indian .BSESN .NSEI and Brazilian markets .BVSP have underperformed this year, down about 16% against a decline of 9% for the broader index. With economic growth already weak before the coronavirus crisis, recovery prospects remain daunting as both countries are among those reporting highest rises in the daily number of infections.

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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