World Markets

EMERGING MARKETS-Stocks rise on trade relief, growth worries curb optimism

Credit: REUTERS/MARCOS BRINDICCI

Asian equities and currencies led gains in emerging markets on Wednesday on relief over Washington's move to delay tariffs on some Chinese goods, although weak data and political turmoil continued to weigh on risk sentiment.

By Sruthi Shankar

Aug 14 (Reuters) - Asian equities and currencies led gains in emerging markets on Wednesday on relief over Washington's move to delay tariffs on some Chinese goods, although weak data and political turmoil continued to weigh on risk sentiment.

The yuan CNY= jumped to its highest level in a week and mainland China stocks .CSI300, .SSEC edged higher after U.S. President Donald Trump backed off his Sept. 1 deadline for 10% tariffs on certain Chinese imports and said both sides will speak again by phone within the next two weeks.

The news set off a wave of buying in global markets, with the MSCI index of developing world stocks .MSCIEF jumping 0.5% as heavyweight indexes of South Korea .KS11, Taiwan .TWII and India .BSESN.NSEI gained between 0.6% and 1.3%.

"The delay... provides a much needed respite for EM spreads, and the monetary policy outlook remains strongly supportive for the asset class," Trieu Pham, EM sovereign debt strategist at ING wrote in a note. "However, the lack of visibility means that we remain vulnerable to headline risk and rates volatility."

The gains were mostly limited to Asian markets, as data pointing to a surprise drop in Chinese industrial output growth and slump in German exports underpinned fears the global economy was heading for recession.

Russia's rouble RUB= fell 0.5% and its main stock index .IMOEX declined as prices of oil, the country's main export, dropped on disappointing data from China and a rise in U.S. crude inventories. O/R

The Turkish lira TRY= slid 0.5%, while South Africa's rand ZAR= shed 0.3% ahead of the release of June retail sales numbers. A Reuters poll of economists are predicting a 2.3% expansion in the economy's largest sector.

The Indian rupee INR=, however, edged higher after hitting a fresh five-month low on Tuesday when soft retail sales data for July boosted expectations of another interest rate cut in October.

India has been one of many emerging economies to cut rates this year, and by a wider margin than expected, as central banks turn to monetary policy easing to offset slowing growth in the wake of U.S.-China trade war.

Hong Kong-listed shares .HSI gave back early gains even as the country's airport reopened after violent clashes between police and pro-democracy protesters.

Second-quarter growth numbers for east European economies pointed to a mixed picture, the Czech Republic expanding more than expected and Hungary's economy slowing to an annual 4.9%, still exceeding analyst forecasts.

The crown EURCZK= and the forint EURHUF= held steady against the euro. Meanwhile, the Polish zloty EURPLN= fell 0.3% after data showed its economy slowed more than expected in the previous quarter.

For GRAPHIC on emerging market FX performance 2019, see http://tmsnrt.rs/2egbfVh

For GRAPHIC on MSCI emerging index performance 2019, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

(Reporting by Sruthi Shankar in Bengaluru; Editing by Stephen Powell)

((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 6749 6328))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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