Russian stocks hit nr

Posted by Shoaib-ur-Rehman Siddiqui

LONDON: Russian stocks hit their highest in nearly five months on Thursday on easing expectations of sanctions on Russian companies, with high-yielding emerging markets broadly underpinned by dovish tones on US monetary policy. South African stocks hit record highs for a second straight day, following stronger than expected current account data this week.

Russian President Vladimir Putin and Ukrainian counterpart Petro Poroshenko discussed a possible ceasefire in eastern Ukraine this week, after which Poroshenko outlined a 14-step plan, including an amnesty for separatist fighters in eastern Ukraine who lay down their arms.

Fighting in Ukraine, where pro-Russian separatists have been battling government forces for weeks, has weighed on Russian equities, but fears have receded that Russia could invade its neighbour and prompt tougher economic sanctions from the West.

'Russian asset prices rallying all the way back, Russian issuers coming to market, and yet more waiting in the wings the US seems to have backed off from ramping up the sanctions threat,' said Tim Ash, emerging markets strategist at Standard Bank, in a client note.

Russian stocks rose more than 1 percent to their highest in nearly five months - before the start of the crisis over Ukraine. The rouble rose 0.5 percent to its highest in more than three weeks and Russian five-year credit default swaps dropped 11 basis points to 169 bps, according to Markit.

The MSCI emerging equities index rose 0.45 percent to six-day highs, heading back towards recent one-year highs, and emerging European currencies were steady to stronger.

The US Federal Reserve signalled on Wednesday that rising inflation wouldn't trigger an interest rate rise any time soon, driving demand for riskier assets.

'Going into the FOMC meeting, 65 percent were expecting no change and 35 percent were expecting a more hawkish Fed - a lot of the move we have seen in EM FX is a correction of those hawkish positions,' said Ishitaa Sharma, emerging market strategist at Citi.

South African stocks hit fresh record highs and the rand hit 10-day highs after data this week showing a surprise narrowing in the current account deficit.

Turkish stocks gained 1.5 percent on the day, and the lira hit six-day highs, recovering from the previous session's seven-week lows. Turkish CDS fell 10 bps to 172 bps.

Turkish assets have been hit by conflict in neighbouring Iraq in recent days.

Iraq's 2028 dollar bond has fallen 7 cents on the dollar since the conflict started, to 88. China shares had their biggest daily losses in more than seven weeks, however, as the diversion of a sizeable amount of capital for initial public offerings weighed.

Emerging sovereign debt spreads inched out by 1 basis point to 286 bps over US Treasuries.

Argentinian spreads widened by 19 basis points but are off their highest levels, with talks expected next week between Argentina and hedge funds in a long-running legal battle over the country's debt.

from Google News http://#

via IFTTT

Tweet