Currencies mixed as markets assess prospects for larger Fed hike; stocks gain
SPY•Emerging-market currencies traded mixed as the dollar reached a two-week high and markets priced in a nearly certain quarter-point Fed increase in December, while the MSCI emerging-market equity index rose 1.9%. India's Nifty 50 and Sensex hit eight-month highs, and Moody's raised its growth forecast for the country to 7% from 6.5%.
1. Currencies mixed
Emerging-market currencies traded mixed on Wednesday as a stronger dollar and concerns that US interest rates could stay higher for longer pressured riskier assets. After US core inflation accelerated more than expected and Fed policymakers struck a hawkish tone, markets priced in a quarter-point December increase as nearly certain, with an 11% chance of a half-point move. The dollar index reached a two-week high.
2. Equities extend gains
The MSCI emerging-market equity index rose 1.9%, while its currency index gained 0.2%. South Korea's benchmark climbed 2.6% and Taiwan's rose 3.6%, extending a rebound after CoreWeave results reassured investors about AI infrastructure demand. India's Nifty 50 rose 0.3% and the Sensex added 0.4%, both reaching eight-month highs.
3. India forecast raised
Moody's raised its forecast for India's growth to 7% from 6.5% for the fiscal year ending March 2027, citing broad-based expansion and resilience to the energy-supply shock caused by the Iran war. Indonesian stocks fell 0.3% ahead of MSCI's November index review, while the rupiah weakened 0.5%; investors were concerned after MSCI warned Indonesia could lose its emerging-market classification.
