Emerging Market Stocks Climb on Weak US Jobs Data, Boosting Fed Rate Cut Hopes -

Emerging market stocks experienced an uptick on Monday, rebounding from a dip in the dollar that followed last week’s lackluster US jobs report, which raised hopes for potential Federal Reserve interest rate reductions.

The MSCI emerging markets index increased by 0.4%, adding to a rise of over 1% from the week prior. A Bloomberg index tracking developing Asian markets also rose by 0.3%, while another index focused on emerging currency returns showed positive movement. The dollar experienced a slight gain on Monday after a considerable drop last Friday.

Michael Wan, a senior currency analyst at MUFG Bank, noted that the heightened expectations for US rate cuts are boosting yields on emerging-market risk assets. The combination of a weaker dollar and lower US yields is offering some respite to Asian central banks. Nonetheless, ongoing political instability in Japan is causing investor anxiety, especially due to the yen’s significant role in the region.

On Sunday, Japanese Prime Minister Shigeru Ishiba announced his resignation, paving the way for a leadership race that may impact market dynamics. This announcement triggered a 0.7% decline in the yen’s value against the dollar and raised questions about the potential postponement of Japanese interest rate hikes.

As the week unfolds, investors are keenly awaiting key US inflation data that may shape outlooks regarding the timing and scale of Fed rate cuts. Upcoming figures from the producer price index and consumer price inflation reports are anticipated.

“The market remains cautious about inflation driven by tariffs, and any unexpected surge could unsettle USD bears,” states Christopher Wong, a senior foreign-exchange strategist at Oversea-Chinese Banking Corp.

Chinese developers stood out among stock-market performers, experiencing gains thanks to an uptick in the sector as Shenzhen, following Beijing and Shanghai, relaxed home-buying regulations to tackle a property crisis.

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