U.S. Election Propels Assets to Best Week in Five Months
Bloomberg
Published Nov 09, 2020 08:58
(Bloomberg) -- Emerging-market assets rallied last week, dictated by the U.S. election that eventually resulted in a victory for Democrat Joe Biden during vote counting over the weekend. Developing-nation stocks climbed to the highest level in more than two years with both equities and currencies posting their best week in five months. The Federal Reserve left interest rates near zero and made no change to asset purchases.
The following is a roundup of emerging-market news and highlights for the week through Nov. 6:
Highlights:
- Biden defeated Donald Trump and he will become the 46th U.S. president, unseating the incumbent with a pledge to unify and mend a nation reeling from a worsening pandemic, faltering economy and deep political divisions
- The president-elect called on Americans to put aside the divisiveness of the past four years under Trump with a victory speech that promised swift action against the coronavirus pandemic and an orderly transfer of power after a bitter election
- The U.S. became the first country with more than 100,000 daily Covid cases; the number of daily deaths also climbed, topping 1,000 for a third day
- Fed Chair Jerome Powell opened the door to a possible shift in the central bank’s bond purchases in coming months, saying more fiscal and monetary support are needed
- U.S. nonfarm payrolls increased by 638,000 in October, beating the median estimate of 580,000
- The U.S. dismissed as “unacceptable” Beijing’s warnings of further retaliation if the visas of Chinese journalists working in America weren’t renewed;
- Chinese President Xi Jinping called for setting up independent and controllable supply chains to ensure industrial and national security, just as the U.S. moves to cut China off from key exports
- Malaysia’s central bank held its benchmark rate at a record low, while warning of downside risks from the pandemic
- Poland kept borrowing costs unchanged at a record low 0.1% as new projections indicated that inflation will remain elevated
- Brazil’s central bank said possible changes to fiscal policy may alter its pledge to keep the benchmark interest rate at a record low for the foreseeable future
- Czech policy makers signaled they may postpone planned rate increases as the second wave of the coronavirus pandemic clouds the outlook for the economy
- Turkish President Recep Tayyip Erdogan fired the country’s central bank governor, the second time in 16 months he’s ousted the top monetary official, as a series of interest rate increases failed to halt the lira’s slide to a record low
Asia:
EMEA:
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Support for Poland’s ruling party plunged after its chairman, Jaroslaw Kaczynski, defended a Supreme Court abortion ruling, denounced protesters and called on people to defend churches “at all costs”
- The government is stalling the implementation of a high-court ruling that effectively bans abortion amid some of the biggest street demonstrations in decades, while shifting blame for a record coronavirus outbreak on protesters
- Russia for the first time reported more than 20,000 Covid-19 cases in the last day
- Hungary’s government set out new measures to fight the coronavirus pandemic, reinstating a state of emergency and imposing a midnight curfew
- Turkish energy group Aydem Holding AS is gearing up for an initial public offering of its renewable-electricity producer next quarter that could value the unit at as much as $1.5 billion, according to people with knowledge of the matter
- Romania will impose more stringent restrictions, including a nighttime curfew, to try to limit a significant surge in new coronavirus cases
- Ukraine’s parliament passed the 2021 budget in an initial reading as it seeks to meet the conditions to secure the next tranche of a $5 billion International Monetary Fund loan
- Abu Dhabi National Energy Company advanced as much as 15% on Thursday after the company said it would consider allowing foreigners to buy its shares
- Business activity in Egypt grew at its fastest pace in almost six years, buoyed by an uptick in new orders, while Saudi Arabia saw a second month of milder improvements
- Saudi Arabia will remove several controversial restrictions on foreign workers in a labor policy overhaul that officials hope will attract overseas talent and reduce unemployment
- Saudi Aramco (SE:2222) left its third-quarter dividend unchanged even as it failed to generate enough cash to cover the payout and reported a 45% drop in profit
- The U.S. and European Union appealed to Ivory Coast’s political leaders to hold talks over the nation’s disputed election, as a key opposition leader urged the military to defy President-elect Alassane Ouattara
- Ivory Coast’s Eurobonds are handing investors the best returns in Africa even though the nation is embroiled in a disputed election
- Ethiopia’s leader ordered the military to respond to an alleged attack on an army camp in the restive Tigray region, escalating a standoff between the federal and state governments
- Tunisia’s prime minister said he was hopeful the central bank would step in and help finance the budget deficit, saying that the country was facing dire economic conditions
- Kenya is in talks with the International Monetary Fund for a fund arrangement, according to the lender’s resident representative
Latin America:
- Brazil’s industrial production rose for a fifth month in September, the longest streak of gains since 2012
- Consumer prices rose 0.86% in October from the prior month, above the 0.84% median forecast
- Brazilian prosecutors charged the eldest son of President Jair Bolsonaro with money laundering and embezzlement
- The Senate approved draft legislation that grants the central bank its long-sought formal autonomy, while adding a full-employment goal to its main inflation target
- Congress overturned a presidential veto on corporate payroll tax reductions, further straining the nation’s budget amid unprecedented stimulus spending
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Argentina is shifting tack and has begun adopting more orthodox economic measures to try to shore up investor confidence and lure capital back into the country
- Economy Minister Martin Guzman said the government is building a “stability bridge” for the next 60 to 90 days while it comes up with a multi-year macroeconomic plan
- The government extended the deadline for holders of local dollar law debt to exchange their securities for new notes until July 2021
- An IMF mission will arrive in Buenos Aires for meetings with government officials
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The Mexican peso headed for its biggest quarterly gain in almost three years
- Banxico Deputy Governor Gerardo Esquivel said the central bank still has room to cut rates, but policy makers don’t plan to use it now
- Mexican prosecutors are pursuing an arrest warrant against former Finance Minister Luis Videgaray in a probe involving alleged bribery and illegal campaign financing
- Mexico will be excluded from any potential tariffs that the U.S. applies to electrical steel from other countries on national-security grounds after agreeing to monitor its exports for transshipment
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Colombia’s central bank governor, Juan Jose Echavarria, said the rate cut cycle has ended “at least for a period”
- The inflation rate unexpectedly dropped to 1.75% in October from a year earlier, the lowest level in more than six decades
- The central bank revised a 2020 GDP forecast to a 7.6% contraction from negative 8.5% in previous quarterly monetary policy report
- Fitch Ratings affirmed the country at BBB- with a negative outlook
- Peru President Martin Vizcarra called on Congress to hold a vote on his impeachment as soon as possible, saying political uncertainty is damaging for the country
- Congress approved a bill allowing workers to withdraw up to 17,200 soles ($4,732) each from private pension accounts
- Chile’s economy contracted at the slowest pace in six months in September after industries floored by the pandemic bounced back and the government lifted lockdown restrictions
- Inflation unexpectedly sped up in October, rising 0.7% from the month prior compared with a 0.3% forecast
- Uruguay’s central bank kept its benchmark rate unchanged at 4.5%, saying monetary policy will have an expansive bias at least through the end of the Southern Hemisphere summer
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Written By: Bloomberg