* EU leaders reach “historic” rescue agreement
* Several promising trials raise hopes for COVID-19 vaccines
* Weaker euro pushes CEE currencies higher
* Hungarian Central bank to cut interest rate in policy meeting
July 21 (Reuters) - Developing world stocks and currencies gained on Tuesday after the European Union agreed on a massive stimulus plan and several promising trials raised hopes for a coronavirus vaccine, while investors eyed Hungary’s central bank meeting.
Central and eastern European currencies rose against a weaker euro as EU leaders reached an agreement that now paves the way for the European Commission, the EU’s executive, to raise billions of euros in capital markets on behalf of all 27 states.
Poland’s zloty, the Hungarian forint and the Czech Republic’s koruna firmed between 0.2% and 0.4%.
“Simultaneous and coordinated use of monetary and fiscal stimuli is a strong display of EU solidarity and should serve to stabilize market sentiment and secure a stronger economic recovery for the EU,” analysts at Maybank wrote in a client note.
Markets around the world also remained optimistic of early data from trials of three potential COVID-19 vaccines released on Monday, including a closely-watched candidate from Oxford University.
“Risk assets are moving to the vaccine pump’s beat after it was raining positive vaccine trials overnight, and investors are still dancing in that rain,” said Stephen Innes, chief global markets strategist at AxiCorp.
The U.S. dollar touched a four-month low on Tuesday, helping investors bet on riskier currencies such as the South African rand, which added 0.6% and put the Russian Rouble on track for its best day in more than seven weeks.
Emerging market stocks have risen sharply since hitting a trough in March, mainly driven by unprecedented global stimulus, a restart in economic activities and hopes for a possible coronavirus vaccine, but a failure to contain the virus through the second half of the year poses a risk to recovery.
The MSCI International EM Price Index jumped 1.6% to its highest level in nearly two weeks on Tuesday, with Budapest shares rising 0.6% ahead of an expected interest rate cut by the Hungarian central bank at 1200 GMT.
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Reporting by Shreyashi Sanyal in Bengaluru; Editing by Vinay Dwivedi
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