EMERGING MARKETS – Stocks lower after 2 days of rally, but expected to post weekly gains

Band Susan Mathew

Worries over Ukraine pushed emerging market stocks and currencies lower on Friday after strong gains in the past two sessions, while the ruble rallied ahead of the more expected Russian central bank policy decision. late in the day.

Japan and Australia imposed sanctions on Russia as peace talks between Kyiv and Moscow stalled. Investors are now focused on talks between US President Joe Biden and his Chinese counterpart, with Biden set to warn China against supporting Russian aggression.

The Russian Ruble RUB= jumped 6% in offshore trade, while flat in Moscow RUBUTSTN=MCX, hovering at 103 per dollar. The country appears to have moved away from the brink of default, with some funds saying they received their due bond coupons on Wednesday. UK/RUB

On Thursday, S&P downgraded Russia’s sovereign credit rating to ‘junk’ over default risks stemming from harsh Western sanctions, while Germany’s Scope became the first agency to withdraw its Russian sovereign credit rating following the European Union’s ban on rating the country and its companies.

Markets are awaiting the Russian central bank’s decision scheduled for 10:30 GMT where the key interest rate is expected to be kept at 20% after a sharp emergency rate hike at the end of February.

“The big question is about the governor of the central bank… In my opinion, there is a risk that she resigns and that would be a blow to the Russian inflation outlook, because she played a very important role in driving the Russian economy through this crisis,” said Jakob Christensen, chief analyst and head of emerging markets research at Danske Bank.

In broader emerging markets, the MSCI Developing Country Equity Index .MSCIEF lost 0.3% with big names in Hong Kong technology .HSTECH in the red. The emerging markets index had gained more than 9% over two days, putting it on track to end the week up nearly 3%, its highest gain since September.

The Currency Index .MIEM00000CUS lost 0.1% as the dollar regained strength. XRF/

The Turkish Lira TRY= extended declines after the central bank kept the benchmark borrowing rate at 14% on Thursday despite wartime expectations pushing inflation higher. Goldman Sachs now sees Turkey’s inflation remaining above 60% for most of this year.

Central and Eastern European currencies fell against the euro, the Hungarian forint EURHUF= down 0.4%.

Emerging market hard-currency bond funds suffered their 10th week of outflows, according to JPMorgan. The investment bank said bond funds saw $13 billion in net outflows this year, the worst start to the year since 2014.

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 .EAST

For the RUSSIAN market report, see UK/RUB

(Reporting by Susan Mathew in Bengaluru; Editing by Vinay Dwivedi)

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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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