Emerging Markets Rally Following Positive U.S. Employment Data

Emerging market stocks and currencies saw a broad rise on Friday, set for weekly gains buoyed by positive U.S. employment data that alleviated recession fears. Stocks in Asia and Europe experienced varied outcomes, with emerging market equities seeing notable inflows despite recent outflows in EM debt.

Emerging market stocks and currencies recorded significant gains on Friday, spurred by positive U.S. employment data that calmed recession concerns. This marked a potential weekly rise for these markets after weeks of decline.

Notably, Asian equities, especially from Taiwan and South Korea, led the upward trend. Despite this, South Korea's Kospi index was on track for its worst weekly decline since September 2022, influenced by a global selloff in technology and semiconductor stocks. The broader emerging market currency index climbed 0.4%, eyeing a 0.7% weekly increase, its best since December.

The tumultuous week saw global markets reacting negatively to poor U.S. economic data. However, subsequent comments from Japan's deputy governor and a significant drop in U.S. jobless claims helped to steady investor nerves. Anticipation of a potential interest rate cut by the Federal Reserve also bolstered confidence in high-yielding emerging market assets, which saw $2.3 billion in inflows over the past 10 weeks.

European markets had mixed results, with Polish stocks leading while Turkish stocks saw declines. Meanwhile, the Israeli shekel strengthened against the dollar, marking its third consecutive day of gains. Key geopolitical developments included calls from U.S., Egyptian, and Qatari leaders for Israel-Hamas negotiations to finalize a Gaza ceasefire agreement.

(With inputs from agencies.)