(Bloomberg) -- Developing-nation stocks rose for the first session in four as investors wait for major central bank decisions, key economic data and earnings this week.
MSCI index for emerging stocks closed with a 0.5% gain Monday, led by Asian tech heavyweights, as risk sentiment improved at the start of a week. Developing currencies ended the day little changed as the dollar strengthened, while Latin America underperformed peers with Colombian peso leading losses. Mexico’s peso slipped to the lowest level in more than a month, trading at 18.6 per US dollar.
“Latam FX may be under pressure at the moment due to the weakness in commodity prices and softer US equity prices,” said Benito Berber, chief Latin America economist at Natixis.
Last week investors yanked cash from large exchange-traded funds with heavy allocations to Chinese stocks.
Upcoming monetary policy decisions in the US, Japan, and the UK — as well as several countries in Latin America — will help provide guidance on the demand for riskier assets. Investors will also watch GDP data from the euro zone, as well as from emerging nations including Hungary and the Czech Republic.
“We expect the Fed to hold rates but it may lay the groundwork for a September cut,” strategists at ING Bank including Francesco Pesole wrote in a note Monday. “We’ll see whether month-end flows offer some respite to the battered high-yielding currencies, even though the carry trade unwinding may continue this week if we are right with our call for a 15bps Bank of Japan rate hike on Wednesday.”
Elsewhere, Venezuela’s dollar bonds fell as political tensions soared anew after President Nicolás Maduro was declared the winner of Sunday’s election. The opposition, rejecting that claim, called on the military to enforce what it said was the will of the people. In response, Venezuela named opposition leader María Corina Machado as a key suspect in its investigation of alleged electoral sabotage in Sunday’s presidential vote.
The International Monetary Fund approved a $3.4 billion funding program for Ethiopia after the nation’s central bank allowed its currency to trade freely as a key move to secure more than $10 billion funding from the multilateral lender.
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