EMERGING MARKETS-EM stocks jump as global sentiment recovers; Poland cuts rate, Czech verdict awaited

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EM stocks up 0.8%, FX up 0.1%

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Poland lowers interest rate by 25 basis points

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Czech Republic to announce rate decision later in the day

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Czech industrial output up 0.4% in September

By Nikhil Sharma

Nov 6 (Reuters) - Emerging market stocks jumped on Thursday as global risk sentiment improved following favourable U.S. economic data, while regional investors responded to an interest-rate cut in Poland and awaited the Czech National Bank's decision.

A broad gauge of emerging market stocks rose 0.80%, rebounding after two straight days of losses amid growing concerns about stretched technology valuations on Wall Street.

A parallel index tracking EM currencies steadied, edging up 0.1% after five straight days of losses. In contrast, the dollar index was down 0.17%, dragged back by renewed appetite for riskier assets.

Wall Street equities sprang back to life on Wednesday as upbeat services data and stronger-than-expected private payrolls eased concerns that tech valuations are over-inflated. The momentum also inspired Asian shares to trade higher on Thursday.

In Central-Eastern Europe, the Polish zloty slipped 0.1% after the National Bank of Poland cut its benchmark rate by another 25 basis points to 4.25% on Wednesday, as expected, citing a slowdown in inflation and an improvement in its outlook.

Warsaw's benchmark index jumped 0.55%. The country's biggest bank, PKO BP reported a 15% year-on-year increase in its third-quarter profit, taking its shares up 1.8%.

FOCUS ON CZECH RATE DECISION

Attention has shifted to the upcoming policy decision in the Czech Republic, due at 1330 GMT, amid broad expectations that policymakers will keep rates unchanged. Wage pressures and looser fiscal policy are seen making future cuts unlikely.

"The decision on rates itself is a non-event, but forward guidance will be important. We believe that the Czech National Bank has every reason to be neutral or slightly dovish," analysts at ING said in a note.

An election win for former Prime Minister Andrej Babis' populist ANO party has also dampened expectations, as his pledges of higher spending, tax cuts, and pension hikes could push inflation higher. Babis aims to form a coalition government with the support of far-right parties by mid-December.

The Czech koruna traded with caution, while Prague's main stock index edged up 0.1%. Data showed industrial output unexpectedly grew by 0.4% year-on-year in September.

In Hungary, fresh data underscored stable growth as factory output rose by an annual 1.3% in September, exceeding expectations, while retail sales jumped 3% in the same month.

The Hungarian forint edged down 0.12%, though it has outperformed its peers in 2025 by rising 6%. That is thanks to a hawkish pause on interest rates that stand at 6.5% - the joint-highest level in the European Union.

However, a recent Reuters Poll indicated that the gains are expected to pause and retreat around 1% from recent highs over the next six months.

Meanwhile, Budapest stocks were down about 0.24% on Thursday, but up over 35.2% year-to-date.

Elsewhere in Emerging markets, JPMorgan Chase (JPM) CEO Jamie Dimon argued Argentina may not need a bank loan, praising President Javier Milei's efforts of economic overhaul. The country's international bonds were trading higher.

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For RUSSIAN market report, see (Reporting by Nikhil Sharma in Bengaluru; Editing by Aidan Lewis)