Global markets rally as Fed calms rate hike concerns

Stocks in emerging markets surged on Thursday following a mid-week holiday break, buoyed by a reassuring tone from the US Federal Reserve regarding interest rate hikes. Meanwhile, Hong Kong's Hang Seng index extended its winning streak for an eighth consecutive session.

The MSCI index for emerging market stocks gained 0.5 per cent, accompanied by a 0.1 per cent rise in currencies reflecting a widespread rally in global markets after Fed chair Jerome Powell's statement indicating that rate hikes were "unlikely," which lifted investor sentiment.

The Hang Seng index soared by 2.5 per cent, initiating May on a positive note after the Labor Day holiday break, with technology, property, and financial stocks leading the gains.

Sentiment received further support from Beijing's commitment earlier this week to bolster economic support through prudent monetary and proactive fiscal policies. The Hong Kong Monetary Authority maintained its base rate unchanged at 5.75 per cent, aligning with the Fed's decision to hold rates steady.

Mainland China markets remained closed for holidays from May 1-3.

In currency markets, the Hungarian forint outperformed its central and eastern European peers, climbing 0.4 per cent against the euro. Data revealed a downturn in factory activity in Poland, the Czech Republic, and a softening outlook in Hungary during April.

The Czech crown remained steady ahead of an interest rate decision, with expectations for the Czech National Bank (CNB) to announce its third consecutive 50-basis-point cut. Meanwhile, Poland's zloty slipped 0.2 per cent against the euro.

Nicholas Farr, an economist at Capital Economics, commented on the weak manufacturing PMIs from Central and Eastern Europe in April, indicating that industrial sectors continued to weigh on the regional recovery at the onset of Q2.

The Russian rouble advanced to 92.08 from 93 per dollar, while the South African rand gained 0.3 per cent. Data showed a slowdown in Russia's manufacturing sector growth in April, marking the slowest rate in three months.

The Turkish lira edged higher against a weaker dollar, unfazed by a PMI survey indicating a contraction in Turkish factory activity in April.

In other emerging markets news, South Korea introduced guidelines for companies participating in a government program aimed at boosting shareholder value. Ratings agency Moody's revised Brazil's outlook to positive from stable, citing stronger economic growth while maintaining the country's credit rating.

India's manufacturing sector experienced a slight slowdown in April, although demand remained robust, according to a survey.

(With Reuters inputs)