EMERGING MARKETS-Fed rate hike lifts stocks, weighs on currencies
By Claire Milhench
LONDON Dec 17 (Reuters) - Emerging stocks rose about 1 percent on Thursday after the United States raised interest rates for the first time since 2006, ending uncertainty that has dogged markets, but a stronger dollar weighed on currencies while Argentina lifted capital controls.
The benchmark emerging equity index climbed to a nine-day high, extending gains for a third session and well on track for solid weekly gains after the U.S. Federal Reserve raised interest rates by 0.25 percent in a well-telegraphed move. The central bank also signalled the pace of policy tightening would be gradual.
"Things played out in the way we had all expected so we can tick this box and move on," said Michael Bolliger, head of asset allocation, emerging markets, at UBS Wealth Management.
Investors interpreted the move as a sign of confidence in the world's largest economy, and added to positions across global stock markets.
"The implication from the Fed move is the U.S. economy is on track, which is helping equities and emerging markets," Bolliger added, whilst cautioning this didn't mean emerging markets were out of the woods.
Chinese mainland shares gained almost 2 percent to three week highs, Indonesian shares rose over 1.6 percent to a near two week high and Korean stocks climbed 0.4 percent.
But with the dollar firming almost 1 percent against a basket of currencies, emerging market currencies fared less well, with the Turkish lira and the South African rand trading broadly unchanged, while the Russian rouble weakened 0.4 percent as oil continued its decline.
The yuan touched its weakest level since June 2011 after China's central bank set its daily guidance rate at new a 4-1/2-year low. Continuación...