EM stocks near highs as Asia tech rallies, but Brent's breach of US$100 clouds sentiment

Global emerging-market stocks indexes hovered near multi-month highs on Wednesday, buoyed by gains in tech-heavy Asian bourses. The MSCI's EM stocks gauge gained 0.3% and was trading close to two-month highs. South Korea's KOSPI tech-heavy index rose, with chipmaker SK Hynix leading the charge, up 3.5%. Taiwan's benchmark index also added 0.2%.

However, surging oil prices, with benchmark Brent crude breaching $100 a barrel for the first time since July, kept broader risk appetite in check. Analyst Ipek Ozkardeskaya noted the fading optimism around a potential Middle East peace deal, with energy costs pushing policymakers to reassess monetary policies globally. Traders now price a 60.40% chance of a Fed rate hike at the September meeting, compared to 44.40% a month ago.

Chinese equities in Shanghai and Shenzhen indexes edged up 0.3% each, with factory-gate inflation and consumer prices rising due to Middle East conflict-induced energy cost hikes. The Chinese yuan strengthened, touching a three-year high. Overall, emerging market currencies were mostly higher against the US dollar, with the Indonesian rupiah and South African rand among the notable gains.

However, South Africa's economy shrank for the first time in almost two years, and its economy contracted. Emerging Europe currencies weakened against the euro, and Poland's central bank is expected to keep interest rates unchanged. Senegalese bonds showed some recovery after a debt restructuring announcement earlier in the month.