BENGALURU: Equities in Asian emerging markets hovered near their lifetime highs and currencies advanced against the dollar on Friday, as bets on aggressive US rate cuts drew investors into higher-yielding assets.
Equity benchmarks in Taiwan, South Korea, and Singapore traded near their record levels on the day. The MSCI index tracking EM Asia stocks rose for the sixth consecutive day to touch a fresh four-year peak.
Most regional indexes were headed for their strongest weekly gains in months, with the MSCI gauge marking its best weekly performance in about a year.
Strengthening prospects of US rate cuts have propped up Asian stocks, as lower borrowing costs weaken the dollar and draw more money into high-yielding emerging markets.
“We continue to believe that some areas in the ASEAN-4 markets are worth a look in light of a reduction in tariffs-related uncertainty, resumption of Fed rate cuts, investor under-positioning, attractive relative valuations and lagging performance,” said Chetan Seth, an equity strategist at Nomura.
Markets continue to project a 100 percent chance of a Fed rate cut next week, with some predicting an 8 percent probability of a more aggressive half-point reduction.
Thursday’s US inflation data, seen as supportive of rate cuts, prompted traders to price a 90 percent chance of two more moves this year.
Indonesia’s Jakarta Composite jumped more than 1 percent to a four-session high, consolidating after the sudden departure of the country’s reputed finance minister earlier in the week triggered massive foreign outflows.
