EMERGING MARKETS-Shares hit 26-month high, FX squalls abate ahead of Yellen testimony

  • Reuters
  • Stock Market News
EMERGING MARKETS-Shares hit 26-month high, FX squalls abate ahead of Yellen testimony
Credit: © Reuters.

By Marc Jones

LONDON, July 12 (Reuters) - Emerging markets shares hit 26-month highs on Wednesday and the rand, lira and rouble clawed back some of their recent heavy losses, after more Russia-linked controversy for Donald Trump had weakened the dollar.

It was a third-straight day of gains for MSCI's 24-country EM stocks index .MSCIEF as markets from Hong Kong .HSI to Poland .WIG20 , as well as recently-hammered Qatar .QSI all powered higher.

A jump in oil prices also helped Russian stocks .MCX and the rouble RUB= shrug off the latest twist in the Trump story as bond yields 78307ADH3= dipped too.

E-mails showed his eldest son had eagerly agreed to meet with a woman he was told was a Russian government lawyer with damaging information about Hillary Clinton. Korea's won KRW= , Taiwan's dollar TWD= and the Thai baht THB= had all posted their biggest intraday gains in at least a month in Asia trading.

EMEA followed their lead, showing none of the usual caution ahead of a semi-annual Congressional grilling of Federal Reserve chief Janet Yellen later, likely to produce signals on U.S. interest rates and the Fed's plans to shrink its balance sheet. rand ZAR= , which has been battered by political uncertainty in recent weeks, saw its biggest jump in almost a month as it climbed to 13.4525 per dollar.

It also shrugged off a delay to quasi-sovereign utility Eskom's annual results after external auditors found "irregularities". lira TRY= which has also been hammered along with the rand and rouble was steady, while Poland's zloty PLN= and Hungary's forint HUF. which have been soaring consolidated the respective 2017 and two-year highs versus the dollar they had hit on Tuesday. CEE/

"We had a big move in dollar versus CEE currencies yesterday," said Rabobank emerging markets strategist Piotr Matys.

"Key levels were broken including the zloty at 3.7 (per dollar) so unless Yellen says something particularly hawkish in her testimony later CEE crosses will remain front heavy."

Focus remained on China's credit growth too, as data showed banks extended 1.54 trillion yuan ($226.9 billion) in net new yuan loans in June, well above analysts' expectations. prospect of a default by Venezuela also seems to mounting. Rating agency S&P Global cut its rating on the strained South American country to CCC-, the last rung before default late on Tuesday. GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://tmsnrt.rs/2dZbdP5

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB )

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