Emerging market stocks surged on the back of a tech stock rally, with a gauge for measuring developing world stocks rising 2.8% this past week, increasing for all but one session. Among the highest performers were emerging stocks from Asia, particularly Alibaba Group Holding, Samsung Electronics Co., and Taiwan Semiconductor Manufacturing Company.
The release of key inflation data painted a positive economic outlook for the United States, raising bets that the Federal Reserve will start to lower interest rates as early as its September policy meeting. The introduction of interest rate cuts is expected to help fuel an appetite for riskier assets.
“We are close to the beginning of a US easing cycle with a 25 basis point September cut pretty much baked in,” chief investment officer at Gama Asset Management Rajeev De Mello observed.
Emerging currencies have also been on the rise, with the South African rand rising for a ninth straight day, its longest winning streak since 2011. Inflation has continued to cool since February, thereby providing the central bank with justification to lower interest rates.