(Bloomberg) — Markets in three large emerging economies rose after Turkey’s sovereign rating was raised and the outlook for both Egypt and Nigeria was raised.
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Fitch Ratings has raised Egypt’s credit rating outlook to positive from stable after the North African country secured an international rescue. Egyptian dollar banknotes due in 2047 hit their highest price in more than three weeks. Turkey’s five-year credit default swaps, the cost of insuring Turkey’s debt in case of default, fell to their lowest level since February after S&P Global Ratings upgraded its sovereign rating. The rating agency cited the government’s return to more orthodox economic policies.
“Sentiment towards Turkish assets is likely to improve further after S&P’s credit rating upgrade over the weekend and no upside surprises in April inflation trends,” Deutsche Bank said in a note on Monday. . “We expect municipal bond performance to accelerate significantly over the summer.”
Nigeria’s credit rating outlook has also been upgraded to positive by Fitch as progress on reforms since President Bola Tinubu took office last year has been faster than expected.
fiscal pressure
Elsewhere in emerging markets, the forint has received some support since late April, when S&P left Hungary’s credit rating and outlook unchanged despite budget pressures. Slovakia also avoided its second downgrade in four months after Prime Minister Roberto Fico’s government pledged to reduce its fiscal deficit.
Read more: Eastern Europe’s top credit rating downgrade rate is 10-0 per week
Broad sentiment remained upbeat on Monday as Asian stocks continued to rise, with Hong Kong and Taiwan listed stocks being the main gainers. Emerging market stocks rose for a third day, rising 0.6% by 1:29 p.m. in London.
Lighter economic data this week and Monday being a UK bank holiday may have reduced volume in some markets, but expectations of a Fed rate cut have been revived. This is still seen as a source of support.
“During relatively quiet trading this morning, European markets remain optimistic about the latest rate cut, with stocks posting modest gains and bond yields falling further,” Rabobank said in a note on Monday. ” he said.
The shekel fell by about 1% against the dollar after the Israeli military told civilians to leave parts of Rafah, a move that could be a prelude to a long-anticipated attack on Gaza City. This is the lowest level since mid-April.
(Eastern Europe background, latest information including latest prices)
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