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Dovish Powell increases rate cut hopes

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MSCI EM indexes poised to snap multi-day losses

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Carry trade opportunities may soon arise, analyst says

By Niket Nishant and Johann M Cherian

Oct 15 (Reuters) - Emerging market stocks and currencies

shook off recent pessimism on Wednesday after U.S. Federal

Reserve Chair Jerome Powell's remarks increased hopes of lower

interest rates, offsetting concerns about renewed trade tensions

between Washington and Beijing.

An MSCI index tracking emerging market equities

climbed 1.9%, on course for its first gain after three straight

sessions of losses. A similar gauge for currencies

gained 0.5%, set to snap a six-day slide.

Dovish signals from the Fed generally reduce the appeal of

the U.S. dollar, which can ease pressure on emerging

market currencies and make local assets more attractive to

investors.

A weaker dollar also lowers borrowing costs for countries

and companies with dollar-denominated debt, which is significant

for many economies that rely on external financing.

The current economic backdrop could also yield carry trade

strategies, where investors borrow cheaply in dollars and chase

higher yields in emerging markets.

"There are good opportunities in carry trade and at least

for the next half a year, the trend is optimistic," said

Vladimir Miklashevsky, an independent Finnish analyst.

MIXED SIGNALS ACROSS MARKETS

Saudi Arabia's benchmark index rose 0.3%. The

International Monetary Fund upgraded its 2025 economic growth

forecast for the country on Tuesday.

The South African rand and the benchmark 2035

government bond also strengthened, despite a warning

from a Moody's analyst who said weak investment was hurting its

credit rating prospects.

India's benchmark equity index, the Nifty 50, was up

0.8%, on track to snap a two-day losing streak.

While the rebound underscores how sensitive emerging markets

remain to global monetary policy cues, gains may be uneven

across countries.

Malaysia's stock index was flat. The government will

hold talks with the U.S. secretary of commerce on sectoral

tariffs, including on semiconductors, during a meeting of the

ASEAN regional bloc next week, state media reported.

Turkey's main BIST 100 share index was flat on

Wednesday, after closing lower in the last five trading

sessions. The lira was slightly weaker against the

dollar.

Mainland China stocks traded higher, with the Shanghai

Composite index up 1.2% as investors kept their hopes up

for new monetary stimulus following data that showed

deflationary pressures persisted due to prolonged property

market downturn and trade tensions with the U.S.

Elsewhere, Pakistan's international bonds

maturing in 2051 rose one cent on the dollar

each after the IMF said it had reached a staff-level agreement

with the south Asian country on its loan program, which would

allow the country to access $1.2 billion after approval from the

fund's board.