EMERGING MARKETS-Equities hit record high as domestic data and Fed rate-cut outlook in focus

By Ragini Mathur and Twesha Dikshit

Jan 14 (Reuters) - Most Emerging Markets equities rose on Wednesday, with the broader stock index hitting a record high, as investors monitored domestic updates and U.S. inflation data drove their expectations of rate cuts.

As geopolitical tensions stay high, U.S. President Donald Trump urged Iranians to keep protesting, saying help was on the way. Iran responded by accusing Trump of encouraging political destabilisation and inciting violence.

Tension is also elevated over Greenland and Venezuela, and yet investors have pushed global markets higher.

The MSCI emerging market stock index .MSCIEF rose 0.6%, exceeding Tuesday's record high.

ANALYST SAYS EQUITIES OFFER 'STRONGEST RISK REWARD'

"Adding to EM allocations is a consensus trade for the year, but we believe equities yield the strongest risk reward," said Geoff Yu, EMEA macro strategist at BNY.

"FX valuations are generally supportive, as they correspond to currency strength that helps limit pass-through inflation. However, the prospect of rate cuts, while the Fed is not accelerating its own easing, creates a challenging environment for more sustained FX gains."

South Africa's benchmark stock index .JTOPI was trading at record peaks. The country's government on Tuesday welcomed approval of a bill by the U.S. House of Representatives that would renew Washington's preferential trade programme for Africa for another three years.

Turkey's benchmark share index .XU100 was also hovering around all-time peaks. Hungary's stocks .BUX rose 0.5% to a record high, while Poland's .WIG20 were down 0.7%.

In Asia, South Korea's KOSPI index .KS11 and Taiwan's benchmark index .TWII climbed record peaks on sustained strong demand for artificial intelligence-related assets.

CURRENCIES HOLD STEADY

The Hungarian forint EURHUF= was up 0.1% against the euro, while the Polish zloty EURPLN= and the Romanian leu EURRON= were little changed.

Romania's annual inflation rate eased in December but remained near double digits due to government tax hikes that are designed to lower the highest budget deficit in the European Union.

Market participants await Poland's central bank interest rate decision later in the day, with most analysts polled by Reuters expecting rates to remain unchanged.

The South African rand ZAR= strengthened 0.3% against the dollar, benefiting from robust precious metal prices.

The broader currency gauge .MIEM00000CUS ticked up 0.1%.

The U.S. dollar index was little changed on the day after U.S. data on Tuesday indicated moderate price pressures.

The dollar has come under pressure this week because of concerns over the Fed's independence, which some investors believe strengthens the case for diversification beyond U.S. assets.

Markets will monitor the U.S. Supreme Court's rulings later in the day, which could include litigation on the legality of Trump's global tariffs.

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