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AI optimism drives rally in stocks

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S.African rand extends gains

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Brazil rate decision due later

By Sruthi Shankar

June 19 (Reuters) - A rally in global technology shares

sent a gauge of emerging market equities to four-week highs on

Wednesday, while the South African rand climbed towards 11-month

highs as investors welcomed the formation of the new unity

government.

The MSCI's index of EM stocks climbed 1.32% to its

strongest level since May 23. A surge in AI chipmaker Nvidia's ( NVDA )

shares and soft U.S. data overnight helped to push

world stocks to all-time highs.

Asia's tech-heavy bourses in Taiwan, South Korea

and Hong Kong rallied between range of 1.2% and

2.9%.

South African assets surged, with the rand piercing

the 18-per-dollar mark for the first time since August 2023. The

currency strengthened to as much as 17.9200 before pulling back

slightly.

Johannesburg shares extended gains for a third day, with the

benchmark index rising 1.7% to a more than one year

high.

President Cyril Ramaphosa is set to take the oath as South

Africa's president for a second term after last month's election

where the African National Congress (ANC) lost its majority for

the first time since the end of apartheid 30 years ago.

Five political parties joined the ANC in a government of

national unity including the pro-business Democratic Alliance,

which is favoured by markets.

"This alludes to markets and FDI finding what might be

considered a more business/investment favourable coalition

outcome, reducing the risk of leftist policy uncertainty," said

Shaun Murison, senior market analyst at IG.

Meanwhile, data showed South Africa's headline consumer

inflation came in at 5.2% year-on-year in May, the same as in

April.

Most EM currencies got a reprieve this week after

softer-than-expected U.S. retail sales data on Tuesday raised

expectations of interest rate cuts from the Federal Reserve this

year.

Trading activity is expected to be light due to a U.S.

holiday on Wednesday.

In central and east Europe, the Hungarian forint

slipped against the euro, reversing some of Tuesday's gains

after the central bank said the scope for more rate cuts in the

second half of this year would be extremely narrow after it

lowered its base rate by just 25 basis points.

The Czech crown weakened to 24.890, a one-month

low versus the euro.

The Czech National Bank board will have a big debate over

whether to maintain its interest rate-cutting pace at 50 basis

points or opt for a smaller 25 bps reduction at its June 27

policy meeting, Vice-Governor Jan Frait was quoted as saying.

HIGHLIGHTS:

** Putin and North Korea's Kim sign comprehensive strategic

partnership pact, Ifax reports

** Fire at drone-hit Russian oil depot rages for second day,

emergency services say

** Chile central bank lowers interest rate to 5.75%, more

cuts expected

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