Emerging Market Shares Jumped on Trade Deal Hopes

BEIJING, China – As the optimism of market players towards sealing phase one of the trade agreement between China and the US, emerging market shares rallied on Tuesday.

The trade deal between two of the largest economies in the world marks a major turning point in the global economic growth, and with that, the emerging market shares in Russia hit fresh record highs on Tuesday’s trading session.

The increasing trade deal confidence drove the .MSCIEF index of developing world shares higher by around 1.1%, marking its highest record high since one and a half years ago. Shares in the .SSEC in China also tracked major gains for the day, recording a hefty 1.3% gains after topping its three-month high.

The confidence in global investors increased after the US and China said on Friday that the much-awaited partial agreement to end the trade war between the two countries have been reached. The limited agreement has included the suspension of the tariff set on December 15 and doubling the amount of US exports to China.

Trade reports on Tuesday cited sources saying that the Chinese government will supply tariff waivers to buyers in their country who will purchase farm products from the US on a more regular basis.

According to the Chief Investment Officer at the UBS Global Wealth Management, Mark Haefele, the political decisions, particularly on trade, will continue to be a focus in the market in 2020. in the near term, according to Haefele, the volatility of the market will largely follow on the updates of the details that are included in phase one of the trade deal between the US and China.

Further, the demand for riskier assets is heightened as the Christmas holiday period looms over, following a choppy year with the political tensions between the US and Turkey as well as the struggling economy in South Africa.

Back on stocks, most emerging market shares tracked gains on Tuesday, with the .JTOPI South African equities as the top gainer, marking its fifth day of consecutive gains.

Russian shares .IMOEX also advanced by 0.5%, hitting an all-time high, mainly boosted by the gains in energy companies.

In the currencies sector, the lack of new updates on trade kept the currency market in the developing world largely muted against the US dollar. A basket of currencies of emerging markets .MIEM00000CUS remained range-bound with the South African rand and Turkish lira tracked modest declines.

After today’s session, the market awaits on the economic data released from the US, UK, and Europe.