Emerging-Market Stocks, Currencies Gain After Soft US Jobs Data

(Bloomberg) — Emerging-market stocks and currencies climbed at the start of a new week as expectations for Federal Reserve rate hikes eased following Friday’s unexpectedly weak US employment report.

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An MSCI gauge of developing-market stocks was up 0.7%, on track to erase all of last week’s losses. An index of emerging-market currencies rose 0.2% to head for a fourth day of gains. Indonesia’s rupiah led the advance. The Bloomberg Dollar Spot Index edged higher after dropping 0.4% to its lowest in more than two months on Friday.

Focus now shifts to US consumer price data due later this week. Monday’s gains in emerging-market assets came even as oil prices rose again. Brent traded above $84 a barrel as Iran and Oman remained short of a deal to reopen the Strait of Hormuz, while Houthi militants claimed an attack on a Saudi refinery near the Red Sea.

“The strength of emerging-market currencies is mainly driven by the drop in the US dollar last week,” said Wee Khoon Chong, senior Asia Pacific market strategist at BNY in Hong Kong. “US CPI this week will be the key catalyst, dictating near-term evolution of the US dollar and therefore EM currencies.”

The MSCI Emerging Markets Index of stocks is now up for August after a two-month loss. Shares of tech firms Taiwan Semiconductor Manufacturing Co., Delta Electronics Inc. and SK Hynix Inc. were the top contributors to its gains on Monday.

Elsewhere, Indonesia’s stock benchmark was on track to enter a technical bull market, with investor sentiment buoyed by signs of a resilient economy and easing concerns over potential market downgrades.