Emerging-market stocks rose for the first time in five days on Monday on signs of improving corporate performance in Asia and a thaw in US-China relations, while traders gear up for key US inflation data on Tuesday.
The benchmark MSCI Emerging Markets Index rebounded above its 50-day moving average, with Taiwan Semiconductor Manufacturing Co. contributing almost a third of the gauge’s gains after posting the first monthly sales increase since February. The $70.5 billion Vanguard FTSE Emerging Markets ETF reversed losses to finish the session up, while currencies were mixed.
Investors will scrutinize results from Asian technology and e-commerce firms to gauge whether China’s stimulus is helping quicken the country’s post-Covid recovery. Meanwhile, sentiment is improving as Beijing signals it wants to improve relations with the US, ahead of this week’s meeting between presidents Xi Jinping and Joe Biden. China may unveil a commitment to buy Boeing 737 jetliners during the APEC Summit in San Francisco.
Read more: China Weighs Ending Freeze on Boeing With 737 Max Deal in US
An index of developing-nation currencies was little changed, with the Mexican peso leading gains across its Latin American peers. The Chilean peso underperformed after the Finance Ministry slowed the pace of dollar sales last week, while investors continue to prefer more liquid regional currencies.
On the bond space, Egypt’s sovereign dollar notes posted some of the best performances on Monday, with Panama and Gabon also among gainers. Brazil’s dollar bonds traded slightly down as the nation launched the sale of its first-ever sustainable bond.
There is an increasing preference among investors in US exchange-traded funds for developing-nation bonds over stocks. The iShares JPMorgan USD EM Bond ETF received $388 million of fresh inflows last week, the most since January. The biggest emerging-market equity ETFs, on the other hand, failed to garner substantial inflows.
Goldman Sachs Group Inc. offered a cautious view on China, lowering its recommendation on the country’s Hong Kong-listed stocks, while maintaining a bullish view on its shares traded on the mainland. Morgan Stanley, for its part, stays equal-weight on China overall.
Read more: Goldman Downgrades Hong Kong-Traded China Stocks, Raises India
The Israeli shekel fluctuated between gains and losses after the US conducted airstrikes on eastern Syrian locations linked to Iran, while Biden continued his efforts to free hostages seized by Hamas last month.
--With assistance from Vinícius Andrade.
