{"id":6192,"date":"2025-02-04T14:41:21","date_gmt":"2025-02-04T19:41:21","guid":{"rendered":"https:\/\/guardianglobe.org\/?p=6192"},"modified":"2025-02-04T14:41:22","modified_gmt":"2025-02-04T19:41:22","slug":"emerging-markets-rally-as-trade-war-fears-subside","status":"publish","type":"post","link":"https:\/\/guardianglobe.org\/?p=6192","title":{"rendered":"Emerging Markets Rally as Trade War Fears Subside"},"content":{"rendered":"\n<p>Emerging-market stocks and currencies surged Tuesday as fears of a full-blown trade war eased. President <strong>Donald Trump<\/strong> agreed to postpone 25% trade levies on <strong>Canada and Mexico<\/strong> in exchange for tighter border security, while <strong>China<\/strong> delivered a measured response to newly imposed U.S. tariffs. The news fueled a strong rebound in riskier assets, with developing-world stocks posting their biggest gain since September.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Emerging-Market Currencies Surge, Except the Mexican Peso<\/h2>\n\n\n\n<p>The rally was most evident in emerging-market currencies, which climbed as the <strong>U.S. dollar weakened<\/strong>. However, the <strong>Mexican peso<\/strong>, despite an initial outsize rally following the tariff pause, lagged behind its peers, weakening as much as <strong>0.8%<\/strong> during Asian trading.<\/p>\n\n\n\n<p>Meanwhile, <strong>Mexico\u2019s stock market<\/strong> surged 2% after reopening from a local holiday, benefiting from improved sentiment.<\/p>\n\n\n\n<p>\u201c<strong>The assumption in markets seems to be that the issue is resolved and we can all move on<\/strong>,\u201d wrote <strong>Brad Bechtel<\/strong>, head of global FX strategy at Jefferies. \u201c<strong>We have to remember it is a 30-day pause and Trump is Trump, so I would expect the fireworks are far from over.<\/strong>\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Federal Reserve Policy Provides Additional Support<\/h2>\n\n\n\n<p>Risk assets found another tailwind after data showed that <strong>U.S. job openings declined more than expected<\/strong>. This raised hopes that the <strong>Federal Reserve<\/strong> could resume interest rate cuts sooner than anticipated, adding to the momentum in emerging markets.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Commodity-Driven Currencies Lead the Charge<\/h2>\n\n\n\n<p>The <strong>Chilean peso<\/strong> was the biggest winner among Latin American currencies, reaching its highest level since December. The move coincided with a rally in the price of <strong>copper<\/strong>, Chile\u2019s primary export. Investors saw China\u2019s <strong>targeted retaliatory tariffs<\/strong>\u2014which included higher duties on select U.S. goods\u2014as a calculated move to avoid escalating tensions further.<\/p>\n\n\n\n<p>In Asia, the <strong>Korean won<\/strong> and <strong>Singapore dollar<\/strong> led the advance, while the <strong>offshore yuan<\/strong> held near a record low against the dollar. The full impact of China\u2019s tariff response will become clearer when its markets reopen on Wednesday after the <strong>Lunar New Year holiday<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Turkey and Panama in the Spotlight<\/h2>\n\n\n\n<p>The <strong>Turkish lira<\/strong> weakened slightly against the dollar, though <strong>Finance Minister Mehmet Simsek<\/strong> expressed optimism, stating that inflation-adjusted gains would continue. \u201c<strong>Bringing down the inflation rate is really the key,<\/strong>\u201d he emphasized.<\/p>\n\n\n\n<p>Meanwhile, <strong>Panama\u2019s dollar bonds<\/strong> extended gains after reports surfaced that the nation is considering canceling its contract with a <strong>Hong Kong-based company<\/strong> that operates ports near the <strong>Panama Canal<\/strong>. The move was seen as a potential concession to the U.S. amid Trump\u2019s warnings about countering China\u2019s influence in the region.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Strong Gains for Egypt and Ukraine<\/h2>\n\n\n\n<p><strong>Egyptian debt<\/strong> posted some of the strongest gains among emerging markets after the country secured <strong>$1.5 billion<\/strong> in funding for <strong>oil and food security<\/strong> from the <strong>International Islamic Trade Finance Corp.<\/strong><\/p>\n\n\n\n<p>Similarly, <strong>Ukraine\u2019s dollar bonds<\/strong> rallied after Trump signaled interest in striking a deal with Kyiv that would include access to <strong>rare-earth minerals<\/strong>, a critical resource for global technology and defense industries.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p>While trade tensions have de-escalated for now, the <strong>30-day pause<\/strong> on tariffs leaves markets on edge. Emerging-market assets are enjoying a rebound, bolstered by a weaker U.S. dollar and expectations of further <strong>Federal Reserve rate cuts<\/strong>. However, with Trump\u2019s unpredictability and China\u2019s long-term strategy still in play, the risk of renewed volatility remains high.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Emerging-market stocks and currencies surged Tuesday as fears of a full-blown trade war eased. President Donald Trump agreed to postpone 25% trade levies on Canada and Mexico in exchange for tighter border security, while China delivered a measured response to newly imposed U.S. tariffs. The news fueled a strong rebound in riskier assets, with developing-world<\/p>\n","protected":false},"author":5,"featured_media":6193,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[3462,356,910,397,3460,3459,3007,3461,3085,3463],"class_list":{"0":"post-6192","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-chile-copper","9":"tag-donald-trump","10":"tag-emerging-markets","11":"tag-federal-reserve","12":"tag-mexico-peso","13":"tag-panama-canal","14":"tag-trade-war","15":"tag-turkish-lira","16":"tag-u-s-tariffs","17":"tag-ukraine-rare-earth-minerals"},"_links":{"self":[{"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/posts\/6192"}],"collection":[{"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6192"}],"version-history":[{"count":1,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/posts\/6192\/revisions"}],"predecessor-version":[{"id":6194,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/posts\/6192\/revisions\/6194"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/media\/6193"}],"wp:attachment":[{"href":"https:\/\/guardianglobe.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6192"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6192"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6192"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}