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Stocks fall after rising up to 0.7%
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Chinese chip stocks, Samsung rise
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Currencies make muted moves
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Turkish industrial out expands for 26th straight month
By Susan Mathew
Oct 12 (Reuters) – Emerging market stocks on Wednesday bounced back from 30-month lows but soon gave up gains to trade flat, while currencies made small moves, as investors fretted about a global recession and geopolitical concerns while awaiting key U.S. data.
The emerging market currencies index, down 8.5% on the year and on course for its worst year on record, was unchanged.
Investors now eyeing Thursday’s U.S. inflation data to make bets about the Federal Reserve’s tightening path after labour market data last week strengthened the case for a fourth 75 basis points hike.
“It’s clear this week that investors have one eye on the U.S., with Fed minutes this evening, U.S. inflation data tomorrow, and the start of earnings season likely to be the primary drivers into Friday’s close,” said Craig Erlam, senior market analyst, UK and EMEA at Oanda.
A deteriorating Ukraine crisis, chaos in UK gilt markets following the government’s fiscal plan, and worries about recession due to higher rates have prompted warnings from the World Bank and International Monetary Fund among others, sapping risk appetite.
EM hard currency debt spreads remained at a ten-day high of 553.
MSCI’s index of emerging market stocks rose as much as 0.7% before giving up gains as a weak open for Western European bourses dulled appetite for emerging Europe, Middle East and African stocks.
This undid a recovery from April 2020 lows spurred by a rise in some hammered chip stocks, and an over 1% rise in mainland China stocks aided by strong bank lending data.
Chinese semiconductor stocks rose 4.2% following a five-day rout, with the U.S. scrambling to tackle unintended consequences of its new export curbs on China’s chip industry.
South Korea’s SK Hynix and Samsung Electronics Co rose 4.2% and 1.7%.
Turkey’s beleaguered lira was flat. Data showed industrial production expanded 1% year-on-year in August, less than expected but extending its rise for a 26th consecutive month against a background of surging inflation and lira weakness.
“Slowing growth and pressure from President Tayyip Erdogan make it more likely that interest rates will be cut (in Turkey) further from 12% to single digits in the coming months,” said Liam Peach, senior EM economist at Capital Economics.
“In an environment of tightening external financing conditions, this triggers capital outflows and further sharp falls in the lira.”
South Korea’s won rose 0.4% after the central bank raised interest rates by a half percentage point and flagged more to come. 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 Susan Mathew in Bengaluru; editing by Uttaresh.V)
