EMERGING MARKETS-EMEA currencies tick lower in risk-off trade; stocks edge up

  • Reuters
  • Stock Market News
EMERGING MARKETS-EMEA currencies tick lower in risk-off trade; stocks edge up
Credit: © Reuters.

* South African rand recovers from worst day in nearly 3 weeks

* Chinese bull rally pushes up MSCI EM stocks index

* Investors may be booking profits - analyst

By Ambar Warrick

July 8 (Reuters) - Most emerging market currencies moved lower on Wednesday as safe-haven demand pushed up the dollar, while concerns over rising coronavirus cases capped gains in equities.

Weak oil prices continued to pressure Russia's rouble RUB= , while its peers in Europe, Africa and the Middle East edged lower. O/R

Central European currencies such as the Hungarian forint EURHUF= and the Czech crown EURCZK= fell to the euro after disappointing industrial output data on Tuesday.

With COVID-19 cases rising exponentially in the United States, as well as in developing economies such as India and Brazil, investors pivoted to the dollar on the possibility of new lockdown measures against the pandemic. USD/

The caution saw most emerging market stocks and currencies come off a nearly week-long rally spurred by positive economic readings from the developed world.

"It seems that following a decent winning streak, some investors may have taken the opportunity to lock some profits," Charalambos Pissouros, senior market analyst at JFD Group, wrote in a note.

"Until we see more lockdown measures being reintroduced around the world, we would treat yesterday's slide as a corrective retreat", he wrote, adding that better-than-expected economic data would set the stage for more risk-on sentiment.

EMEA currencies have traded rangebound in recent weeks, with investors seeking better returns in stocks due to lower borrowing costs and concerns over economic strength in the region.

For instance, Turkey's lira TRY= was muted for the day, having barely moved 0.1% in either direction over the past two weeks. Concerns over spiking inflation have clouded the lira's outlook.

Turkish stocks .XU100 edged up for the day. Still, broader EMEA equities were a mixed bag, with Russian markets .IMOEX .IRTS retreating, while central European stocks moved in a flat-to-low range.

The MSCI's index of developing world stocks .MSCIEF rose about 0.8%, supported largely by a continued bull run in Chinese stocks. .SS

South Africa's rand ZAR= outperformed its EMEA peers, recovering from its worst session in nearly three weeks.

For GRAPHIC on emerging market FX performance in 2020, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2020, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

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