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Traders bet on September Fed rate cut, stocks soar

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Trump threatens to raise tariffs on India again

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MSCI EM FX down 0.2%, stocks add 0.6%

By Purvi Agarwal

Aug 5 (Reuters) - Most emerging market currencies were

subdued on Tuesday, while stocks gained ground on hopes that the

U.S. Federal Reserve will cut interest rates soon.

MSCI's measure of global EM stocks gained 0.6%, on

track for a second day of gains.

Expectations that the U.S. Federal Reserve could ease

monetary policy soon have risen after a weak U.S. jobs report

revived worries over the health of the world's biggest economy.

The resignation of Fed Governor Adriana Kugler over the

weekend also gives President Donald Trump scope to appoint a

replacement, prompting speculation this could increase the

likelihood of rate cuts.

Markets are now pricing in a 88% chance of a September rate

cut, up from a 63% from before the data, according to CME's

FedWatch Tool.

Most heavyweight Asian stocks gained, including those in

South Korea which recorded their best session in more

than one month, while Taiwanese stocks hit their highest

since February 21.

Regional bourses in emerging Europe were broadly higher.

Romanian stocks were up 0.7% and Hungary gained

0.4%. Polish stocks slipped 0.2%.

Stocks in South Africa were 0.2% higher, also

boosted by rising gold prices, while in Turkey stocks

gained 0.4%.

Kathleen Brooks, research director at XTB, said the fact

that two interest rate cuts are being priced in now was a great

driver for the market, given that tariff concerns had taken a

backseat in driving risk sentiment.

But some concerns persisted, with import duties on many U.S.

trading partners set to take effect on August 7.

U.S. President Donald Trump on Monday threatened to raise

tariffs again on Indian goods, over the country's purchase of

Russian oil.

India's rupee was down 0.2% and stocks

dipped 0.3%.

Among the BRICS member countries, Brazil and South Africa

also facing some of the highest duties among U.S. trading

partners.

"The whole idea of tariffs is to redress this imbalance that

Trump sees with the BRICS countries," said Brooks.

"He's going to try and force India to get their oil from the

U.S. rather than Russia."

South Africa's rand was down 0.5%. Turkey's lira

was little changed.

The dollar index was slightly higher on the day, on

track to recover some of its more than 1% decline on Friday.

MSCI's gauge of EM currencies was 0.2% lower.

Currencies in emerging Europe were largely subdued against

the euro, barring the Hungarian forint which fell

0.7%.

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