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Why Emerging-Market Stocks and Currencies Rose on Tuesday
Emerging market stocks rose for a second day as lower U.S. yields, a weaker dollar and softer oil supported risk appetite.
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Key takeaways
- Emerging market stocks rose for a second day as lower U.S. yields, a weaker dollar and softer oil supported risk appetite.
- Flávio Bolsonaro won 47% of Brazil’s first round vote to Lula’s 45.2%; the result sent the Bovespa to a record, but it did not settle the October 25 runoff.
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openai.comCreate a landscape editorial hero image for this Studio Global article: How did easing Treasury yields, a weaker dollar, rebounding bonds and Brent crude’s fall below $100 support Tuesday’s rise in emerging-marke. Article summary: Tuesday’s emerging-market rally had two drivers: lower US yields and a weaker dollar made emerging-market assets more attractive, while cheaper oil eased inflation and import-cost worries. Brazil had an additional, elect. Topic tags: general, general web, news, government, user generated. Style: premium digital editorial illustration, source-backed research mood, clean composition, high detail, modern web publication hero. Use reference image context only for broad subject, composition, and topical grounding; do not copy the exact image. Avoid: logos, brand marks, copyrighted characters, real person likenesses, fake screenshots, UI text, readable text, watermar
Emerging-market assets advanced Tuesday as pressure from U.S. yields eased, the dollar weakened and oil prices softened. Brazil’s markets had an additional catalyst: Flávio Bolsonaro’s stronger-than-expected first-round showing prompted investors to reassess the election outlook, even though the October 25 runoff is still undecided. 17
Why the broader emerging-market rally gained ground
Lower U.S. yields and a weaker dollar can make emerging-market assets more attractive to investors. On Tuesday, a gauge of developing-world stocks rose for a second consecutive session. The emerging-market currency index briefly gained before ending roughly flat, though most currencies advanced during the day.
Oil added to the more supportive backdrop. Brent traded below $100 a barrel during Tuesday’s session as increased Middle Eastern exports and plans for a G7 release of up to 100 million barrels of crude and diesel eased immediate supply concerns. The relief was not a sign that Gulf risks had disappeared: reports continued to note attacks and uncertainty around regional supplies. 6
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South Africa offered a local example of investor demand. Its weekly government-bond auction attracted orders of 16.3 billion rand against 2.55 billion rand on offer—the strongest demand in four months. The rand also advanced, with one report putting its gain at about 0.7%.
Brazil’s election result gave the rally an extra lift
Bolsonaro received 47% of the first-round vote, compared with 45.2% for Lula. Neither secured an outright win, so they advance to the October 25 runoff. The result was stronger for Bolsonaro than pre-election polling had suggested. 17
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Investors treated the outcome as a change in the odds, not a final verdict. Brazil’s main stock index, the Bovespa, surged 7.7% on Monday to a record closing level of 206,911.89, its largest daily gain since March 2020. Brazilian assets retained attention Tuesday: J.P. Morgan and Deutsche Bank upgraded Brazilian stocks, while Allspring’s Derrick Irwin described the Brazil ETF rally as a positive surprise for emerging-market investors.
That response reflects market expectations about what a possible Bolsonaro presidency could mean for policy. But prices cannot confirm that a particular fiscal plan or business agenda will be adopted. The runoff remains unresolved, so Tuesday’s strength reflects investors’ repricing of political possibilities—not certainty about Brazil’s next government. 17
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Emerging market stocks rose for a second day as lower U.S. yields, a weaker dollar and softer oil supported risk appetite.
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Emerging market stocks rose for a second day as lower U.S. yields, a weaker dollar and softer oil supported risk appetite. Flávio Bolsonaro won 47% of Brazil’s first round vote to Lula’s 45.2%; the result sent the Bovespa to a record, but it did not settle the October 25 runoff.