EMERGING MARKETS – Stocks and currencies sweat as emerging market growth fears and the US Fed tightens further

Band Anisha Sircar

July 27 (Reuters)Emerging market stocks slid on Wednesday as investors braced for a potentially big U.S. rate hike later in the day, while regional currencies struggled as the dollar hovered just below a 20-high years thanks to the support of flows of safe value.

A 75 basis point (bp) hike in the US Federal Reserve is priced in, with a 13% chance of a 100 bp hike. The focus will also be on a press conference at 6:30 p.m. GMT to hear whether Fed policymakers’ resolve to hike further is fading as growth slows. FEDWATCH

“EM (emerging markets) are facing weak external demand alongside tighter US monetary conditions – this is generating a strong dollar environment, which is weighing on global trade, while currency pass-through limits room for accommodative policies,” said Michel Nies, emerging markets economist at Citigroup. .

Shares .MSCIEF lost 1.5% this month, while currencies .MIEM00000CUS are down 1% as rising inflation, political uncertainty and growing concerns about a global recession undermined investor confidence in July.

The International Monetary Fund slashed its global growth forecast again on Tuesday, warning that risks from high inflation and the war in Ukraine could push the global economy to the brink of recession.

“Emerging markets will eventually face a more favorable combination of external demand and US monetary conditions again, but getting there may take longer than usual: the Fed may seek to restore credibility and structural change in China towards a less emerging market-friendly economic model is likely to continue,” Nies said.

Emerging market stocks fell 0.3%, Chinese stocks .SSEC, .CSI300 slipping to 0.5% amid heightened market caution.

Profits at Chinese industrial companies rebounded on growth in June after two months in the red, but fears of a resurgence of COVID-19 cast a shadow over future factory output.

The currencies were mixed, the yuan CNY= and the Indian rupee RNI=IN little changed, while the South African rand ZAR= and the Mexican peso MXN= added 0.4% and 0.2% respectively, and the Turkish lira TRY= was down 0.2%.

The dollar held at 107.08, not far below the 20-year high from mid-July of 109. XRF/

Egyptian book EGP= traded at 18.87 to the dollar. The IMF said the country needed to make “decisive progress” on fiscal and structural reform as Cairo seeks a new round of support from the fund.

For 2022 Emerging Markets FX Performance CHART see http://tmsnrt.rs/2egbfVh

For the GRAPH on the performance of the MSCI emerging index in 2022, see https://tmsnrt.rs/2OusNdX

For TOP NEWS in emerging markets

For the CENTRAL EUROPE market report, see EEC/

For the TURKISH market report, see .IS

For the RUSSIAN market report, see UK/RUB

EM FX since Mayhttps://tmsnrt.rs/3JcAmTR

(Reporting by Anisha Sircar and Susan Mathew in Bengaluru)

(([email protected];))

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

About Louis Miller

Check Also

Global central banks expected to hike rates this week

Yahoo Finance’s Jared Blikre breaks down Wall Street’s expectations for upcoming central bank policy changes. …