Emerging markets show positive momentum amid economic uncertainty

Emerging market stocks experienced a lift on Tuesday, led by gains in key Asian equities. The MSCI index for these markets rose by 0.7% as of 0900 GMT, marking a potential third straight session of upward movement. This growth was bolstered by strong performances in China, India, and Taiwan. Additionally, Chinese officials reassured global investors of their commitment to financial sector reforms and increasing foreign market access, alongside efforts to strengthen Hong Kong’s role as a financial hub.

In contrast, currency movements in emerging markets presented a more varied scenario. The Chinese yuan slipped by 0.2% in offshore trading, and the Indian rupee hit a record low of 84.415 per dollar. Central Eastern European currencies also faced challenges, with Hungary’s forint weakening by 0.3% against the euro. As Hungary’s central bank is expected to hold its rate steady at 6.5%, the region remains under economic scrutiny. South Africa’s rand fell by 0.7% as investors awaited key economic data, including an anticipated 25 basis point rate cut and Wednesday’s inflation report.

South Africa’s stock market, however, saw gains of about 0.5%, primarily due to a rise in gold mining stocks supported by higher bullion prices. While recent market fluctuations were influenced by concerns over U.S. monetary policies and the Federal Reserve’s direction, the current stability of the dollar index suggests limited volatility ahead of the U.S. November jobs report.

Emerging markets have shown resilience and growth in equities despite mixed performances in currency markets. With steady investor confidence in reforms and market openings in regions like China, alongside stabilising factors in South Africa, these markets continue to navigate a complex global economic environment.

Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.

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