Emerging Markets-Stocks surge as Asian chipmakers spark relief rally; FX mixed

** China's factory activity shrinks in July as demand falters, fuelling slowdown concerns ** Indonesia's trade deficit likely narrowed in June to $790 million ** Drone strike at Egypt port near Suez Canal ignites new shipping risks The MSCI global EM currencies gauge .MIEM00000CUS rose 0.3%, and looked set to end the month up 2%. Barclays analysts noted that inflows in EM bond funds slowed in the week, while fund flow momentum in equities stayed strong. Investor sentiment in emerging Europe was mixed, with Polish .WIG stocks gaining 0.5%, while Hungarian benchmark .BUX and energy-laden Romanian equities .BETI slipped 0.2% and 0.3%, respectively. Equities in Poland and Hungary have been supported by easing inflation and rate cuts from central banks recently. Poland's July inflation was in line with expectations, data showed on Thursday. The Polish zloty EURPLN= edged 0.2% lower against the euro, and Hungarian forint EURHUF= slipped 0.8%. The broader Central and Eastern Europe equities .MIME00000PUS also rose to stand 8% up for the month, outperforming broader EM stocks weighed down by higher crude prices after renewed escalation in the Middle East. Oil prices were heading for their first monthly gain in four, though they eased 0.2% on Friday as traders weighed signs of growing supplies after Saudi Arabia said it would lead a coalition to boost defence cooperation on key maritime chokepoints. O/R Asian currencies were mixed against the dollar, while South Africa's rand ZAR= was muted. The Turkish lira TRYTOM=D3 slipped 0.3%. Emerging market stocks were heading on Friday for their biggest single-day jump since the 2008 financial crisis after a relief rally in Asian chipmakers, while currencies were mixed against a steady dollar. MSCI's global EM equities index .MSCIEF climbed 6.6%, rebounding from a three-month low but stayed on track for monthly losses. A rebound in global tech stocks lifted market sentiment, with Wall Street's Nasdaq .IXIC rising 2.8% overnight, led by a surge in shares of Microsoft MSFT.O that boosted its stock value by $450 billion. Wild swings in South Korea's chip-heavy KOSPI .KS11 have sent emerging market equities on a rollercoaster ride in recent weeks, as investors switched from enthusiasm at the AI boom to concerns that higher valuations and spending may not generate returns. The KOSPI soared 18%, though it saw its worst month since October 2008, while Taiwan's tech-heavy .TWII advanced 8%. Uncertainty over the Federal Reserve's policy path has also returned to the spotlight this week after Chair Kevin Warsh offered little guidance on the outlook for interest rates. Markets now price a 63% chance of a September rate hike, according to CME Group's FedWatch tool. "Our expectation is for the Fed to undershoot market expectations on rate hikes," said Nick Rees, head of macro research at Monex. "We expect to see some of the downside pressure removed that could have otherwise weighed on emerging market FX, so we see the dollar slipping and emerging market currencies specifically benefiting from that dynamic."

Emerging Markets-Stocks surge as Asian chipmakers spark relief rally; FX mixed

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Emerging market stocks jump on chipmaker-led relief rally

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