EMERGING MARKETS-EM stocks gain, FX muted before central banks verdicts; elections watched
By Sudeshna Ghoshal and Purvi Agarwal
Oct 27 (Reuters) - Most emerging market stocks advanced on Tuesday, led by technology heavyweights, while currencies were subdued as elections across regions and central banks' decisions remained in the spotlight.
Claude maker Anthropic filed for a US initial public offering on Monday, improving sentiment towards AI stocks. South Korea's tech-heavy KOSPI .KS11 rose 3% on Tuesday, helping a 0.9% gain on MSCI's global EM equity index .MSCIEF.
Equities in emerging Europe held up, with those in Poland .WIG20 and Hungary .BUX ticking up 0.3% and 0.8% respectively but the ones in Romania .BETI slipping 0.2%.
In Turkey, the unemployment rate rose 0.5 percentage points month-on-month to 8.4% in September, official data showed on Tuesday.
Local stocks .XU100 were muted while the lira was subdued against the euro.
South Africa's rand depreciated 0.3% against the dollar, while its stocks .JTOPI inched 0.2% higher in choppy trading. Data showed the leading business cycle indicator rose 1.1% month-on-month in August.
Most emerging Europe currencies were subdued against the euro, with the MSCI index .MIEM00000CUS little changed.
Oil rose slightly after retreating from near six-month highs in the previous session. Elevated oil prices have added to inflation worries and prospects of higher interest rates globally. O/R
The US Federal Reserve and the European Central Bank meet this week, with markets widely expecting them to hold interest rates steady.
"What that signals is that those central banks feel that inflation is a problem, but it's not runaway," said Michael Field, chief equity strategist at Morningstar. "That lack of panic is feeding through to markets and investors are latching onto that."
EYES ON ELECTIONS
Elections are a dominating theme for investors this week, with Brazilian President Luiz Inacio Lula da Silva's unexpected win the most notable. His historic fourth term defied prediction markets, precedent and anti-incumbent sentiment prevalent globally.
Markets had largely priced in a victory for right-wing challenger Senator Flavio Bolsonaro, expecting reforms and consolidation of fiscal spending. Interest rates have been high and public finances under pressure in Brazil.
The Ibovespa index .BVSP dropped 13% on Monday in its sharpest daily fall since March 2020 and the real marked its biggest one-day fall since January 1999. On Tuesday, the US-listed iShares Brazil ETF EWZ.P was flat in premarket trading.
Predicting a further selloff, Field said, "You're not going to see a lot happening with that market until the government is actually brought in and the policies are laid out about what's going to happen."
"The fact is a left-leaning leader with presumably left policies that are going to hurt businesses is what the markets are pricing in now. But that might not be the case."
Serbia's Aleksandar Vucic conceded defeat on Sunday to a student-led protest movement, ending the grip on power he had held since 2014. The country's euro-denominated 2031 bond , which rallied in the previous session, was little changed on Tuesday.
Markets will be watching elections in Israel, where Prime Minister Benjamin Netanyahu faces a fight many Israelis consider the most consequential in the country's history and a referendum on his leadership since the 2023 Hamas-led attacks.
Opinion polls show a close race between Netanyahu's Likud party, along with right-wing allies, and a rival alliance led by Gadi Eisenkot. Polling is expected to close at 10 p.m. (2000 GMT).
Israeli stocks .TA125 were up 1.8%, while the shekel strengthened 0.5%.
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