Oct 22 (Reuters) - Emerging-market shares touched their highest in more than two and a half months on Tuesday after encouraging comments from Washington regarding its trade relation with China.
Positive remarks from China had helped markets start the week on an optimistic note. Then White House advisor Larry Kudlow said progress before next month’s Asia Pacific summit might lead the United States to call off increases in U.S. tariffs on Chinese goods planned for December.
Similar comments from Chinese Vice Foreign Minister Le Yucheng and U.S. President Donald Trump also bolstered sentiment.
MSCI’s index of emerging market shares rose as much as 0.4% to its highest since Aug. 1.
“There is a mood of optimism and hope across financial markets on Tuesday morning thanks to upbeat comments from President Donald Trump regarding the progress of trade talks with China,” said Lukman Otunuga, senior research analyst at FXTM.
The signs of progress have raised expectations that a trade agreement could be signed next week the APEC meeting, Otunuga said. But risk aversion could make an abrupt return if talks drag on or turn sour, he said.
Stocks in mainland China and trade-sensitive indices of Taiwan and South Korea rose. Turkey shares gained 0.6%. Russian stocks added 0.2% by 0841 GMT.
Turkey’s lira rose 0.4% after Trump said a five-day truce in Turkey’s offensive into northeastern Syria could be extended beyond Tuesday. Washington had indicated that U.S. sanctions on Turkey would be lifted if the ceasefire became permanent.
South Africa’s rand reached a one-month high. The country’s medium-term budget will be presented to lawmakers on Oct. 30, the National Treasury said on Monday, two days ahead of a Moody’s review of South Africa’s credit rating.
Moody’s is the last of the big three credit-rating agencies to give South Africa an investment-grade rating. Nationwide power outages last week had investors worried about losing the grade.
Hungary’s forint slipped 0.1% before a decision on interest rates by the central bank later on Tuesday. The bank is expected to leave rates unchanged at least until the end of 2020, a Reuters poll of analysts showed. Inflation remains near its 3% target and economic growth looks set to slow.
Elsewhere, Chilean markets will be watched after they tumbled on Monday. A state of emergency was declared in Santiago and other cities following violent protests over the weekend against an increase in public transportation fares.
Chilean President Sebastian Pinera said on Monday evening he would meet opposition leaders to forge a "new social contract" to alleviate inequality. Thousands of demonstrators defied a curfew and marched to protest high living costs. For GRAPHIC on emerging market FX performance 2019, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2019, see tmsnrt.rs/2OusNdX
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