By Claire Milhench
LONDON, June 5 (Reuters) - Strong services sector data and firmer oil prices pushed emerging market equities to fresh two-year highs on Monday, but Qatar stocks and bonds sold off after four other Arab states accused it of supporting terrorism. benchmark emerging equity index .MSCIEF rose 0.3 percent after strong services sector data from key markets such as China, India and Russia.
But Qatar stocks tumbled over 7 percent .QSI and the 2026 sovereign dollar bond fell 1.8 cents to its lowest since the end of March after Saudi Arabia, Egypt, the United Arab Emirates and Bahrain severed ties with Doha. can certainly see a negative impact in the bond market, all the bonds are down 1-2 points along the curve and that is quite unusual. Qatar has always been seen as a safe haven," said Daniel Moreno, a portfolio manager at Rubrics Asset Management.
"It certainly raises a few questions, it certainly raises my eyebrows."
Credit rating agency Moody's said the regional rift could have a negative impact on Qatar if it disrupted trade and capital flows. country's five-year credit default swaps rose to a two-month high on the uncertainty, nudging up 2 basis points (bps) from Friday's close to 61 bps, according to IHS Markit data. from the Middle East, emerging markets performed well, with gains across stock indices and currencies, helped by the positive data and the rise in oil prices LCOc1 .
Softer than expected U.S. non-farm payrolls data on Friday has also tempered Federal Reserve rate hike bets, pushing the dollar .DXY to seven-month lows and in turn helping emerging currencies higher.
"Pretty much every single currency in EM is up against the dollar this year at an average of about 5 percent," said Moreno.
"It's a trend that started last year and it's because the economic environment in the U.S. is not as strong as everybody anticipated and because Trump's policies will take a bit longer to come to fruition."
The Mexican peso MXN= jumped 1.7 percent to a one-week high after the ruling party narrowly fended off a leftist party in a key state election on Sunday, according to preliminary results. yuan CNY= advanced after the central bank set its guidance at a near seven-month high and Chinese services sector activity expanded at the fastest pace in four months in May. dollar-denominated stocks .IRTS rose 0.8 percent and the rouble RUB= firmed 0.2 percent after Russian services activity maintained strong growth. stocks .NSEI also hit a fresh record high with India's services firms creating jobs at the fastest pace in nearly four years. Turkish lira TRY= firmed about 0.3 percent to its strongest since mid-December, after Turkey's annual consumer price inflation edged back from April's eight-year high to 11.72 percent in May. South African rand ZAR= strengthened 0.8 percent to a one-week high after ratings agency S&P kept the country's sovereign rating unchanged on Friday in junk territory. Africa's private-sector activity was little changed in May from April, remaining in positive territory. GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://tmsnrt.rs/2dZbdP5
For CENTRAL EUROPE market report, see CEE/
For TURKISH market report, see .IS
For RUSSIAN market report, see RU/RUB )
Emerging Markets Prices from Reuters
Net Chg % Chg % Chg
Morgan Stanley (NYSE: MS )
Emrg Mkt Indx .MSCIEF 1018.87
+3.79 +0.37 +18.16
+0.00 +0.00 -100.00
2285.28 -17.93 -0.78 +17.32
35150.44 +387.98 +1.12 +9.83
8769.41 +80.91 +0.93 +23.77
+4.72 +0.60 +22.21
+6.46 +0.62 -8.67
.JTOPI 46282.06 -240.47 -0.52 +5.42
.XU100 99025.43 +157.53 +0.16 +26.73
3091.53 -14.01 -0.45 -0.39
.BSESN 31323.84 +50.55 +0.16 +17.64
close currency currency
% change % change
South Africa ZAR=
18.68 +1.81 +12.89
Index Strip Spd Chg %Rtn Index
Sov'gn Debt 11EML EMBIG 320
.06 7 89.96 1
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