By Karin Strohecker
LONDON, May 4 Hawkish tones from the U.S.
Federal Reserve, easing commodity prices and lacklustre Chinese
data weighed on emerging market assets on Thursday with stocks
extending losses for a second day and currencies weakening.
MSCI's emerging market index fell 0.3 percent as
bourses in much of Asia and Turkey
lost ground. Stocks in China closed
at a three-month low after a survey showed activity in services
sector grew at its slowest in almost a year in April, raising
concerns over economic risks.
The losses came after the Fed kept its benchmark interest
rate steady as expected on Wednesday though downplayed weak
first-quarter economic growth, emphasising labour market
strength and signalling it was still on track for two more rate
rises this year.
Yet investors expected this to be a temporary soft patch for
many emerging assets, with markets closely watching key U.S.
employment data out on Friday to show solid increases.
"U.S. dollar and U.S. Treasury yields (are) up post-FOMC but
not convincingly so with futures almost 'fully' pricing in a
June hike, leaving emerging market assets in a benign space of
their own," said Simon Quijano-Evans, emerging market strategist
at Legal & General Investment Management.
Russian stocks bounced back from the previous
days heavy losses when shares in Sistema collapsed
after oil major Rosneft filed a $1.9 billion lawsuit
against the business conglomerate. Sistema shares gained nearly
10 percent on Thursday.
South Korean stocks hit a record high on robust
exports, upbeat earnings and rising hopes for economic stimulus
as the presidential election approaches.
However, the dollar extending the previous session's
gains, crude oil prices trading near their
weakest since late March and copper teetering near a four-month
low weighed on currencies.
South Africa's rand fell 0.6 percent to its weakest
in three weeks as data showed private sector activity contracted
for the first time in nine months in April as new export orders
continued to decline and growth remained marginal in Africa's
most industrialised economy.
Russia's rouble nearly matched those falls, weakening
for a fourth straight session, while Turkey's lira
slipped 0.2 percent.
In the Czech Republic, central bank policymakers were
expected keep interest rates unchanged until 2018 as they
concluded their first meeting since they lifted the cap on the
"While no one expects the Bank to hike rates, the focus will
be on the CNB's thinking on real economy developments, strength
in the labour market in particular, and the fact that the exit
from the FX regime has so far not resulted in a pronounced crown
appreciation," Nomura's Henrik Gullberg wrote in a note to
A Reuters poll showed that analysts expected the Czech crown
to gain more than 4 percent against the euro in the coming year,
lifted by economic growth and anticipated monetary tightening
while shrugging off political uncertainty.
Venezuela's dollar-denominated bonds came under pressure as
protests against the government escalated further. Security
forces battled protesters who lit fires and hurled stones on
Wednesday in rage at President Nicolas Maduro's decree to create
an alternative congress, with another fatality taking the death
toll to 34 during a month of unrest.
For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5
Emerging Markets Prices from Reuters
Equities Latest Net Chg % Chg % Chg
Emrg Mkt Indx 983.27 -2.47 -0.25 +14.03
Czech Rep 1002.08 +5.79 +0.58 +8.73
Poland 2414.54 +22.45 +0.94 +23.95
Hungary 32175.99 +98.27 +0.31 +0.54
Romania 8238.22 +28.34 +0.35 +16.28
Greece 754.32 +5.71 +0.76 +17.20
Russia 1100.03 +3.68 +0.34 -4.54
South Africa 47005.63 +87.74 +0.19 +7.07
Turkey 93587.82 -274.91 -0.29 +19.77
China 3127.29 -8.06 -0.26 +0.76
India 30136.67 +241.87 +0.81 +13.18
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 26.78 26.74 -0.15 +0.85
Poland 4.22 4.20 -0.30 +4.43
Hungary 312.17 311.59 -0.19 -1.07
Romania 4.54 4.54 +0.02 -0.16
Serbia 123.25 123.14 -0.09 +0.08
Russia 57.61 57.36 -0.43 +6.34
Kazakhstan 315.88 315.51 -0.12 +5.63
Ukraine 26.47 26.47 -0.00 +2.00
South Africa 13.50 13.43 -0.49 +1.72
Kenya 103.05 103.00 -0.05 -0.66
Israel 3.62 3.62 +0.02 +6.47
Turkey 3.54 3.53 -0.31 -0.51
China 6.90 6.90 +0.02 +0.69
India 64.18 64.15 -0.05 +5.86
Brazil 3.16 3.16 +0.03 +2.84
Mexico 18.91 18.86 -0.27 +9.53
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 314 -2 .00 7 82.40 1
All data taken from Reuters at 08:53 GMT.
Currency percent change calculated from the daily U.S.
close at 2130 GMT.
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )
(Reporting by Karin Strohecker)