EM stocks up 0.4%, FX flat
Romania's interest rate decision later in the day
Romanian inflation inches lower in line with expectations
US financial shield could be worth up to $20 billion, Hungary's Orban says
South Africa mid-year budget review around 1200 GMT
By Nikhil Sharma
Nov 12 (Reuters) - Emerging market equities extended their winning run on Wednesday, as hopes for an imminent end to the U.S. government shutdown continued to burnish risk assets, while investors awaited Romania's interest rate decision.
Members of the House of Representatives headed back to Washington on Tuesday after a 53-day break for a vote that could bring the longest U.S. government shutdown in history to a close.
MSCI's index of emerging market stocks .MSCIEF rose 0.4% after two straight days of gains, mirroring moves in Asian equities, also underpinned by hopes for an end to the shutdown.
"This is really about the removal of a level of uncertainty that had been weighing on markets for about 40 days," said Fiona Cincotta, senior market analyst at City Index.
"When we remove any element of uncertainty, then that's considered a positive, and that sort of optimism is lifting risk sentiment and boosting risk appetite, and we are seeing that across the global markets."
A parallel gauge for EM currencies .MIEM00000CUS was subdued, with most currencies from central-eastern Europe trading in the red.
The usually quiet Romanian leu EURRON= was down 0.1% ahead of a rate decision later in the day, amid wider expectations that the central bank will keep rates on hold at 6.50% in the face of price pressures triggered by higher taxes and energy prices.
Bucharest stocks .BETI edged up 0.4% to hit an all-time high. Data showed annual inflation inched lower in October in line with market expectations but remained near its highest levels since mid-2023.
Moves in the Hungarian forint EURHUF= have been in focus ever since Prime Minister Viktor Orban secured a temporary reprieve from U.S. sanctions on Russian oil imports. Orban, who faces an election next year, also struck an agreement with Washington that could unlock about $20 billion worth of credit.
For the day, the currency fell 0.6%, set to extend its losses from the previous day, after Hungary raised its budget deficit targets to 5% for this year and next, with higher spending ahead of the 2026 elections.
Budapest's blue-chip index .BUX climbed 1.2%, after declining about 0.6% in the prior session. The Czech koruna EURCZK= was largely flat, while Prague's main stock index .PX jumped 0.44% to hit an all-time high.
The Polish zloty EURPLN= fell 0.13% and the main stock index .WIG20 was flat as investors speculated about the central bank's next policy move. Central banker Henryk Wnorowski suggested a pause on more rate cuts until the March inflation outlook to assess the effects of earlier easing and to ensure inflation remains within target.
The National Bank of Poland cut its benchmark rate by 25 basis points to 4.25% last week, citing a slowdown in inflation and an improvement in its outlook.
Elsewhere in EM, the South African rand ZAR=D3 edged up 0.14% ahead of a mid-year review of public finances at around 1200 GMT amid wider expectations that Finance Minister Enoch Godongwana will present a healthier fiscal picture than at the main budget in May, thanks to stronger revenue collection.
Political unrest engulfed Ukraine after the government suspended Justice Minister German Galushchenko, amid an investigation into corruption in the energy sector.
For TOP NEWS across emerging markets nTOPEMRG
For CENTRAL EUROPE market report, see CEE/
For TURKISH market report, see .IS
For RUSSIAN market report, see RU/RUB
(Reporting by Nikhil Sharma, Editing by William Maclean)
((Nikhil.Sharma@thomsonreuters.com;))
Comments