EMERGING MARKETS-EM stocks tiptoe higher as Fed moves into focus; FX steady

By Pranav Kashyap

Sept 17 (Reuters) - Most emerging market stocks crept higher on Wednesday while currencies were steady, as investors counted down to an expected rate cut from the U.S. Federal Reserve and awaited signals on the extent of future easing.

Markets have priced in a 25-basis-point cut, with analysts calling the cut a non-event. The focus will be the Fed's "dot plot", which could reveal just how aggressive the central bank might get in slashing rates amid a cooling labour market and mounting political pressure from the White House.

Traders are betting on nearly 68 basis points of easing by year-end, according to LSEG data.

A key index of EM stocks .MSCIEF was set for a ninth straight session of gains, fuelled by expectations that lower U.S. borrowing costs will give EM central banks room to follow suit.

"It depends on the path of where the Fed is going, and that's been a real leg up for emerging markets because the more Fed cuts, the more EMs will be able to cut their own rates," said David Nicholls, EM portfolio manager at East Capital.

"If the Fed can keep delivering, the music can keep playing for emerging markets."

Currencies in central and eastern Europe were marginally lower against the euro, with the Hungarian forint EURHUF= easing from an over one-year high touched recently.

Ukraine's international dollar bonds nudged higher. Reuters reported that the Trump administration's first weapons aid packages for Ukraine have been approved and could soon be shipped.

The South African rand ZAR= slipped 0.2%, and Johannesburg stocks .JTOPI fell 0.5% as investors digested data that showed inflation unexpectedly slowed in August. The South African Reserve Bank is widely expected to hold rates steady at 7% on Wednesday.

Meanwhile, Indonesia's central bank delivered a surprise sixth rate cut since launching its easing cycle last September, citing the need to shore up economic growth.

Jakarta stocks .JKSE closed at a record high, while the rupiah IDR= was flat against the dollar.

The divergence in rate actions by emerging markets central banks could add uncertainty to the global rate outlook, with everything riding on the Fed's policy trajectory.

Hong Kong stocks .HSI hit a four-year high, powered by tech and a surge in confidence around China's AI ambitions, with news of a TikTok breakthrough adding fuel to the rally.

As Chinese equities gain favor, investors are increasingly looking beyond U.S. assets for growth and diversification.

For TOP NEWS across emerging markets nTOPEMRG

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB