Emerging Markets-EM stocks rise to over one-week high as easing oil prices lift risk appetite

Elsewhere, Chinese equities gained 0.7% on expectations of a US-China trade truce ahead of a meeting between Presidents Trump and Xi Jinping this week. Vietnamese stocks slipped 0.88%, reversing earlier gains driven by the benchmark's addition to FTSE Russell's emerging market indexes on Monday, a milestone for the country's stock market after years of reforms to attract foreign investors. In Central & Eastern Europe, the Turkish benchmark BIST 100 dropped 2.4% to its lowest since May 22, extending declines after a policy-driven rebound, suggesting investors' doubts about liquidity measures to support the market. The Turkish lira was muted against the dollar. Stocks in Hungary gained 0.7%, while the forint slipped 0.1% against the euro ahead of the central bank's interest rate decision on Tuesday. "We expect no change in rates, but the main focus will be on the inflation target review. How much and what's the timeline for the change of the inflation target for the central bank," said Taborsky. Poland's blue-chip stocks gained 1.3%. Wage growth in the country slowed more than expected in August, easing pressure on inflation, data showed on Monday. In South Africa, the rand was stable ahead of the inflation data and the central bank's rate decision later in the week. Its stocks gained 1.2%. Emerging market stocks rose on Monday, hitting a more than one-week high, as lower oil prices and gains in AI-related stocks boosted sentiment, while currencies largely held steady against the dollar. Oil prices slipped 2.1% to $101.72 per barrel on renewed hopes for diplomatic progress in the US-Iran war, though supply risks linger after Washington and Tehran exchanged fresh threats on Sunday, and Yemen's Houthis said they attacked sites in Saudi Arabia over the weekend. Still, US President Donald Trump said he was open to meeting Iranian President Masoud Pezeshkian on the sidelines of the United Nations General Assembly starting Tuesday in New York, raising hopes the two sides could restart talks to end the six-month-old conflict. "The immediate headlines are positive for emerging markets. I think it's not like a game changer and more like a relief after quite painful last week for EM," said Frantisek Taborsky, EMEA FX & FI strategist at ING. MSCI's index tracking EM stocks rose 1.45%, lifted by Asian tech-heavy bourses in South Korea and Taiwan, up 1.7% and 1.1%, respectively. The currencies index rose 0.23% against the dollar. EM stocks and currencies closed in the red last week after the Federal Reserve hiked interest rates, its first since 2023, boosting the dollar. Investors now brace for a busy week in emerging markets, including policy decisions in Hungary, Mexico and South Africa as well as economic data that could set the tone for regional assets.

Emerging Markets-EM stocks rise to over one-week high as easing oil prices lift risk appetite

China and Vietnam developments

Central and Eastern Europe mixed

EM stocks rise to more than one-week high

Asia leads gains while EM currencies hold steady

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