EMERGING MARKETS-Stocks slide on rate hike, growth worries

By Susanne Mathew

Oct 10 (Reuters) – Emerging market stocks slipped 1.5% on Monday as geopolitical worries made investors nervous about a global recession, while the South African rand hit its lowest level in more than two years on worries about the impact of more power cuts reached.

Chinese stocks slumped after a week-long hiatus, with chip stocks tumbling 7.1% after the US released a sweeping set of export controls on Friday, including a measure to cut off China from certain semiconductor chips sold around the world with US devices were manufactured.

The MSCI index of emerging market equities extended losses to a second straight session after posting its first weekly gain since August on Friday.

As investors increased their bets on a fourth 75 basis point hike from the US Federal Reserve after data showing a tight US jobs market, the dollar rallied and put developing world currencies under pressure.

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The South African rand fell 0.5% after struggling state-owned utility Eskom said it would resume ongoing Monday-Wednesday overnight power cuts to repair unplanned outages and replenish generation capacity. The currency is down 12% so far this year.

“Risk-taking is on a rollercoaster ride. It’s a constant trickle of multiple factors,” said Cristian Maggio, head of portfolio strategy at TD Securities.

“Concerns about recession, inflation, global growth compounded by global geopolitical tensions, the escalation in Russia, Ukraine…”

Massive explosions that shook the Ukrainian capital and other cities also weighed on the mood. The attacks were apparently Russian revenge attacks after President Vladimir Putin declared an explosion on the bridge to Crimea a terrorist attack.

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The Russian ruble weakened in early Moscow trade, slipping to 62-marks against the dollar for the first time in almost three weeks, while the main stock index fell 3.9%.

The Turkish lira was flat at a record low. It fell 0.7% in the session after President Tayyip Erdogan promised on Saturday that the central bank would continue to cut interest rates every month as long as he remains in power.

This comes after the central bank surprised markets by cutting interest rates twice in the past two months despite runaway inflation. The head of the European Bank for Reconstruction and Development questioned Turkey’s unconventional policies as they create challenges in anchoring inflation expectations.

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Turkey’s unemployment rate fell 0.4 percentage point mom to 9.6% in August

Central and Eastern European stocks and currencies weakened as the Russia-Ukraine war escalated. For a 2022 Emerging Markets FX performance CHART, go to http://tmsnrt.rs/2egbfVh. For a 2022 MSCI Emerging Index performance CHART, go to https://tmsnrt.rs/2OusNdX

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For the CENTRAL EUROPE market report see

For the TURKISH market report see

For the Russian market report, see (Bengaluru reporting by Susan Mathew; edit by Uttaresh.V)

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