EMERGING MARKETS-Recession warnings hit stocks, central banks' moves in focus

Among currencies, China's yuan recovered from Monday's slide, up 0.3%, while most other emerging market currencies made small moves against a steadying dollar. India's rupee hit 82.37 against the greenback after the central bank hiked interest rates by 35 basis points and said there would be no laxity in its fight to tame high inflation.


Reuters | Updated: 07-12-2022 15:55 IST | Created: 07-12-2022 15:52 IST
EMERGING MARKETS-Recession warnings hit stocks, central banks' moves in focus
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Emerging market stocks dropped on Wednesday and were on course for their worst session in a month as U.S. big banks warned of a likely recession, while central banks' moves were also in focus.

Executives from the biggest U.S. banks warned of a worsening U.S. economy next year as inflation threatens consumer demand, with JPMorgan Chief Executive Jamie Dimon highlighting the likelihood of a "mild to hard" recession. Data showing China's exports and imports shrank at their steepest pace in at least 2-1/2 years in November also fuelled global recession worries.

MSCI's index of emerging market shares slipped 1.3%, with Hong Kong's main index leading losses, down 3.2%, extending declines after strong gains last week spurred by more easing of COVID-19 curbs. Among currencies, China's yuan recovered from Monday's slide, up 0.3%, while most other emerging market currencies made small moves against a steadying dollar.

India's rupee hit 82.37 against the greenback after the central bank hiked interest rates by 35 basis points and said there would be no laxity in its fight to tame high inflation. Interest rates are expected to remain unchanged in Brazil and Poland after their respective central bank meetings later in the day, while overnight Chile's central bank held rates at 11.25% and said it had reached its peak rate.

In Mexico, the pace of rate hikes could start to slow following four consecutive 75 basis-point increases, deputy governor Jonathan Heath said on Tuesday. The peso was down 0.2%. South Africa's rand fell 0.2% after a three-day winning run with eyes on the political turmoil around President Cyril Ramaphosa amid the "Farmgate" scandal.

In Ghana, S&P Global downgraded the country's long-term local currency bonds to "selective default" and cut the country's foreign currency debt to "CC", saying Ghana's proposed local debt swap was a "distressed exchange offer". Morgan Stanley noted that Ghana's external bonds were still attractive.

S&P also cut Latvia's outlook to "negative" from "stable" and said that a more protracted Russia-Ukraine conflict raised the risks of spillover effects on small regional economies. In Hungary, shares of oil and energy company MOL jumped after the government scrapped a price cap on fuels on Tuesday after a lack of imports and panic buying led to fuel shortages across the country. For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX

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

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