* China stocks lead declines among Asian EMs * MSCI EM stocks index falls for third day * Strong USD weighs on EM currenc
* China stocks lead declines among Asian EMs
* MSCI EM stocks index falls for third day
* Strong USD weighs on EM currencies
* U.S. slaps new sanctions on Russia
April 7 (Reuters) – Emerging market assets stumbled on
Thursday after an aggressive call for further tightening in
monetary policy by the Federal Reserve and a lockdown in China’s
commercial hub Shanghai constrained risk-taking sentiment.
Asian emerging markets led declines across the developing
world after Shanghai, which is already under a city-wide
lockdown, reported over 19,000 new coronavirus cases on April 6.
Stock gauges in China ended more than 1% lower
just a day after bleak economic data.
Most emerging markets were spooked about rising COVID-19
cases impacting China’s demand and economic outlook as it is a
large trading partner to many regions.
The MSCI index of EM stocks shed 1%, falling to
its lowest level in more than a week and set for its third
straight daily loss.
Currencies in emerging markets struggled under the weight of
the U.S. dollar, which remained near a two-year high
after minutes from the Fed’s last meeting revealed that the
Ukraine crisis tempered its first interest rate hike since 2018.
The MSCI gauge of EM currencies dipped 0.2%
as markets price in a more than 85% chance of a 50 basis point
rate hike in May after the minutes also highlighted U.S. central
bank’s combative stance on inflation.
South Africa’s rand weakened 0.4% to a dollar, while
Turkey’s lira declined 0.3%.
While European Union diplomats failed to approve new
sanctions on Wednesday, the U.S. slapped a new round of
penalties on President Vladimir Putin’s two adult daughters, as
well as on Sberbank and Alfa Bank, and a ban on
Americans investing in Russia.
“The extension of full blocking sanctions on the largest
Russian banks (with only energy exemptions), sanctions on
technology developing companies in Russia, technology export
restrictions, ban on all new investments by U.S. entities in
Russia … have to count for at least some further escalation of
sanctions,” said Tatha Ghose, FX and EM analyst at Commerzbank.
Russian stocks however shrugged off the new round
of sanctions, while the onshore rouble
strengthened more than 5% against the dollar, trading
comfortably at pre-war levels.
As the EU prepared to increase sanctions on Moscow on
Thursday or Friday, Hungary said it was ready to pay roubles for
Russian gas. The country broke ranks with the bloc which has
sought a united front in opposing Russia’s demand for payment in
roubles.
For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see
(Reporting by Shreyashi Sanyal in Bengaluru; Editing by David
Holmes)
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