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March 3, 2020, 11:00 a.m. EST

Emerging market assets jump after surprise rate cut spurs weaker dollar

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By Sunny Oh

Prices for emerging market bonds and equities climbed on Tuesday after the Federal Reserve cut interest rates by 50 basis points, boosting the attraction of developing-market assets that can benefit from a weaker dollar backdrop. The iShares JP Morgan USD Emerging Market Bonds /zigman2/quotes/202964510/composite EMB +0.34% exchange-traded fund was up 1.2%, while the iShares MSCI Emerging Markets ETF /zigman2/quotes/201454250/composite EEM +1.73% was up 0.9%. The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.09% , which tracks the performance of the greenback against its major rivals, was down 0.4%. Lower interest rates in the U.S. tend to send investors looking for higher-yielding assets abroad in emerging markets. A weaker dollar also benefits emerging market corporations that borrow in the greenback, making it cheaper to pay down their debt obligations.

/zigman2/quotes/202964510/composite
US : U.S.: Nasdaq
$ 106.40
+0.36 +0.34%
Volume: 4.58M
May 29, 2020 4:00p
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/zigman2/quotes/201454250/composite
US : U.S.: NYSE Arca
$ 37.73
+0.64 +1.73%
Volume: 63.74M
May 29, 2020 4:00p
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/zigman2/quotes/210598269/delayed
US : U.S.: ICE Futures U.S.
98.30
-0.09 -0.09%
Volume: 0.00
May 29, 2020 5:58p
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