Surge in Global Tech Shares Lifts Emerging Markets to Four-Week Highs

A global surge in technology shares propelled emerging market equities to a four-week high. Specifically, Nvidia's performance and favorable U.S. data were key drivers. Meanwhile, the South African rand reached an 11-month peak as President Ramaphosa's new unity government boosted investor confidence.

A rally in global technology shares sent a gauge of emerging market equities to four-week highs on Wednesday, while the South African rand climbed towards 11-month highs as investors welcomed the formation of the new unity government.

The MSCI's index of EM stocks climbed 1.32% to its strongest level since May 23. A surge in AI chipmaker Nvidia's shares and soft U.S. data overnight helped to push world stocks to all-time highs. Asia's tech-heavy bourses in Taiwan, South Korea and Hong Kong rallied between range of 1.2% and 2.9%.

South African assets surged, with the rand piercing the 18-per-dollar mark for the first time since August 2023. The currency strengthened to as much as 17.9200 before pulling back slightly. Johannesburg shares extended gains for a third day, with the benchmark index rising 1.7% to a more than one year high.

President Cyril Ramaphosa is set to take the oath as South Africa's president for a second term after last month's election where the African National Congress (ANC) lost its majority for the first time since the end of apartheid 30 years ago. Five political parties joined the ANC in a government of national unity including the pro-business Democratic Alliance, which is favoured by markets.

"This alludes to markets and FDI finding what might be considered a more business/investment favourable coalition outcome, reducing the risk of leftist policy uncertainty," said Shaun Murison, senior market analyst at IG. Meanwhile, data showed South Africa's headline consumer inflation came in at 5.2% year-on-year in May, the same as in April.

Most EM currencies got a reprieve this week after softer-than-expected U.S. retail sales data on Tuesday raised expectations of interest rate cuts from the Federal Reserve this year. Trading activity is expected to be light due to a U.S. holiday on Wednesday.

In central and east Europe, the Hungarian forint slipped against the euro, reversing some of Tuesday's gains after the central bank said the scope for more rate cuts in the second half of this year would be extremely narrow after it lowered its base rate by just 25 basis points. The Czech crown weakened to 24.890, a one-month low versus the euro.

The Czech National Bank board will have a big debate over whether to maintain its interest rate-cutting pace at 50 basis points or opt for a smaller 25 bps reduction at its June 27 policy meeting, Vice-Governor Jan Frait was quoted as saying. HIGHLIGHTS:

** Putin and North Korea's Kim sign comprehensive strategic partnership pact, Ifax reports ** Fire at drone-hit Russian oil depot rages for second day, emergency services say

** Chile central bank lowers interest rate to 5.75%, more cuts expected For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see For TURKISH market report, see

For RUSSIAN market report, see

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)