Emerging Markets Surge Amid Optimistic Interest Rate Expectations

Emerging market stocks rebounded as the MSCI index tracking these stocks rose 1.3%. The day saw currencies like the Hungarian forint appreciate against the euro following a rise in local inflation. Meanwhile, South Africa's rand saw gains, and China's growth is predicted to slow in 2025.

Emerging market stocks experienced a resurgence on Tuesday, breaking a four-session decline as investors weighed possible U.S. interest rate cuts later this year. The MSCI index tracking emerging market currencies rose 0.2% at 1000 GMT, despite a dollar index uptick that halted its previous winning streak.

The MSCI index tracking emerging market stocks surged 1.3%, potentially marking its best day since October, as Asian and Chinese stocks posted significant gains. Earlier in the week, investor sentiment was dampened by a strong U.S. jobs report, which led to a bond sell-off and recalibrated expectations for U.S. monetary policy easing.

In Europe, the Hungarian forint outperformed against the euro, buoyed by rising inflation. Meanwhile, in the Middle East, the Turkish lira continued to hover near a record low, while South Africa's rand experienced a boost due to strong performance by Johannesburg-listed shares. J.P. Morgan maintained its 3.4% growth forecast for emerging markets in 2025, despite potential shifts in U.S. policy.

(With inputs from agencies.)