By Claire Milhench
LONDON, June 22 (Reuters) - Emerging stocks rose off nine-month lows on Friday but were still set for their worst week since mid-March after an escalation in a trade dispute between the U.S. and China clobbered global markets.
MSCI's benchmark emerging stocks index .MSCIEF was trading up 0.5 percent after hitting its lowest since end-September, but was still set to end the week down around 2.5 percent.
The average yield spread of emerging market sovereign bonds over U.S. Treasuries on the JPMorgan (NYSE: JPM ) EMBI Diversified index also narrowed 5 basis points (bps) to 357 bps, reflecting the stabilisation in markets.
Investors ran for the door earlier in the week after the stakes were raised in the ongoing tit-for-tat trade war between the United States and China. The worry is that increased protectionism will crimp exports and hinder global growth.
According to data cited by Morgan Stanley (NYSE: MS ), some $5.9 billion was pulled from dedicated EM equity funds (ex-China A shares) in the week ended June 20, the highest outflows since September 2015. Monday U.S. President Donald Trump threatened to expand the amount of Chinese imports facing tariffs to $200 billion if Beijing retaliated to his previous target of $50 billion. The U.S. Commerce Secretary reiterated warnings on Thursday. other countries have responded, with India joining the European Union and China in retaliating against U.S. tariff hikes on steel and aluminium by raising import duties on various goods including almonds and walnuts. Asian markets have taken the biggest hit, plumbing six-month lows, although some staged a late session recovery to close up on Friday.
Chinese mainland shares .CSI300 rose 0.45 percent after hitting one-year lows, but are set for a weekly loss of 3.8 percent, their worst since February.
The yuan CNY= also slipped to a more than five-month low against the dollar, and was set for its worst week since September 2017, down 0.8 percent.
Turkey's lira TRY= scraped into positive territory as the country prepared to go to the polls this Sunday.
President Tayyip Erdogan is aiming to extend his 15-year rule and assume sweeping new powers which he says the country needs to address threats to the economy and security.
William Jackson, senior emerging market economist at Capital Economics, noted there had been worrying comments from Erdogan in the run up to the election, potentially reinforcing concerns that a presidential win for him will signal a further shift towards unorthodox policy-making. the past, a victory for Erdogan and the AKP has prompted a rally in the markets as it has been perceived as sign of political stability. But I do wonder if it will be the same this time round," he said.
Polls indicate the elections may be closer than anticipated when Erdogan called the snap elections in April. Russian rouble RUB= was the big gainer, firming 0.9 percent, helped by a 1.2 percent gain in the oil price LCOc1 as the market looked for OPEC to announce an increase in oil production at its Vienna meeting. O/R
India's rupee INR= gained 0.2 percent and South Africa's rand ZAR=D3 0.4 percent, but the latter was still set for a weekly loss after the country's current account deficit registered its largest shortfall in two years in Q1 after a steep decline in exports. at an event in London, South Africa's finance minister said that restructuring state-run power firm Eskom was "on top of the agenda" and that recent outages had had a "very minimal" impact on the economy. Mexican peso MXN= also firmed 0.2 percent and posted a weekly gain of 1.7 percent after the central bank raised rates by 25 basis points to 7.75 percent, its highest level in more than nine years. emerging Europe, most currencies firmed against the euro, with the Hungarian forint EURHUF= gaining 0.5 percent. However, it is still set for a weekly loss of 0.6 percent and remains near an all-time low versus the euro hit in 2015. GRAPHIC on emerging market FX performance 2018, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2018, see http://tmsnrt.rs/2dZbdP5
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 )
Emerging Markets Prices from Reuters
Net Chg % Chg % Chg
Emrg Mkt Indx .MSCIEF 1086.47
+6.28 +0.58 -6.21
+3.45 +0.32 -0.95
2169.27 +18.36 +0.85 -11.86
35341.04 +291.49 +0.83 -10.25
-7.78 -0.10 +4.67
785.13 +12.24 +1.58 -2.15
1127.46 +16.67 +1.50 -2.34
.JTOPI 50321.26 +297.72 +0.60 -4.21
.XU100 95107.56 +50.32 +0.05 -17.54
2889.95 +14.14 +0.49 -12.62
.BSESN 35501.13 +68.74 +0.19 +4.24
close currency currency
% change % change
South Africa ZAR=
4.72 +0.25 -19.52
3.77 +0.06 -12.04
Index Strip Spd Chg %Rtn Index
Sov'gn Debt 11EML EMBIG 378
.18 7 65.84 1
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.