EMERGING MARKETS-Shares set for best week since 2011; ECB bolsters recovery hopes

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EMERGING MARKETS-Shares set for best week since 2011; ECB bolsters recovery hopes
Credit: © Reuters.

* MSCI EM index hits three-month highs

* ECB increases bond buying, extends purchases by six months

* South Africa's rand at 11-week high; higher oil lifts rouble

* Turkish lira sits risk rally out

* EMs need structural, fiscal reforms to rekindle growth - HSBC

By Susan Mathew

June 5 (Reuters) - Emerging-market stocks were on course for their biggest weekly gain in more than nine years and currencies for more than four years as a risk rally on hopes of a global economic recovery was topped off by new monetary stimulus for Europe.

Developing-market stocks .MSCIEF hit a three-month high on Friday. Currencies .MIEM00000CUS rallied as a euro surge weakened the dollar. FRX/

South Africa's rand ZAR= touched an 11-week high, and Russia's rouble RUB= gained for the sixth session in seven as crude prices rose before an OPEC+ meeting to discuss output cuts. Turkey's lira TRY= traded flat. O/R

Among Asian currencies, the Chinese yuan CNY= rose 0.4% and South Korea's won KRW= 0.7%. Indonesia's rupiah IDR= scaled three-month highs. stocks .MIAPJ0000PUS extended gains to a seventh straight session, while equity benchmarks in Turkey .XU100 , Russia .IMOEX and South Africa .JOPTI , Poland .WIG20 and Hungary .BUX rose between 0.5% and 1.7%.

The European Central Bank on Thursday increased the size of a bond-buying programme by 600 billion euros ($674 billion), more than expected, to 1.35 trillion euros and extended purchases by six months, to aid a recovery for the coronavirus-hit economy. follows a series of monetary and fiscal stimuli from around the globe and comes as markets have been encouraged by increasing business activity after a pandemic induced stall.

Investors will now be watching for a U.S. employment report later on Friday, which is expected to show non-farm payrolls fell in May by 8 million jobs after a record 20.54 million plunge in April.

But global investors have grown accustomed to soaring U.S. jobless claims and should look past Friday's jobs numbers barring any massive surprise, said Han Tan, market analyst at FXTM.

The emerging-market stocks benchmark is up about 7% so far this week, while currencies have gained around 1.7%.

The moves come amid simmering U.S.-China trade tensions and persistent concern over the full extent of the COVID-19 pandemic.

Many developing countries still report worrying number of daily new cases and deaths. Turkey is set to impose a two-day weekend lockdown in 15 cities to curb the spread of the virus. at HSBC said given weak economic fundamentals even before the pandemic, emerging markets need structural as well as fiscal reforms focused on infrastructure, education, human capital, the labour market and healthcare to rekindle their growth potential.

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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