EMERGING MARKETS-Stocks, FX muted awaiting global policy cues; Pakistan's IMF review on tap

Market participants will seek clues on when interest rate cuts might commence this year, with bets standing firm for a reduction in June. Meanwhile, a Reuters survey showed China's central bank is expected to leave a key policy rate unchanged when it rolls over maturing medium-term loans on Friday, amid uncertainty over the timing of expected U.S. rate cuts.

Emerging market stocks and currencies were largely listless on Thursday as investors looked for more definite signs about the path of global policy easing cycles, while awaiting the IMF's final review of Pakistan's $3 billion stand-by arrangement.

The MSCI index tracking emerging market stocks edged 0.2% higher as of 5:00 a.m. ET (0900 GMT), while the currencies gauge was muted. Investors keenly await a slew of U.S. economic data, including producer prices inflation and retail sales, ahead of next week's U.S. policy decision. Market participants will seek clues on when interest rate cuts might commence this year, with bets standing firm for a reduction in June.

Meanwhile, a Reuters survey showed China's central bank is expected to leave a key policy rate unchanged when it rolls over maturing medium-term loans on Friday, amid uncertainty over the timing of expected U.S. rate cuts. China's Wuxi AppTec's Shanghai and Hong Kong-listed shares dropped 5.7% and 13.1%, respectively, on a Washington-based global trade association representing biotechnology firms' steps to "separate" from the company. The stock bucked a biotech share rally, fuelled by market talks of potential policy support for the sector.

Turkish President Tayyip Erdogan will speak at a rally in the eastern province of Agri (1100 GMT), ahead of nationwide local elections on March 31. The lira weakened to 32.1255-per-dollar. The International Monetary Fund will hold a second and last review of Pakistan's $3 billion stand-by arrangement this week, during which the country will ask for a new longer-term bailout. The Pakistani rupee fell, while stocks jumped 1.8%.

Further, Finance Minister Muhammad Aurangzeb in an interview said Pakistan will be moving towards tapping the China bond market in the next fiscal year. In Central and Eastern Europe, Hungary's forint underperformed its regional peers. It has been the worst hit so far this year due to a rift between the central bank and government.

"Both the koruna (Czech crown) and the forint are on edge from concerns that their respective monetary policies could become too loose too soon. For the forint, it will be a more uphill battle to ward off structural concerns about an already ultra-dovish reputation," Commerzbank FX analyst Tatha Ghose said. Hungary will, as of April 1, scrap an interest rate cap, that has been applied to loans on small and medium businesses since late 2022, on the back of easing inflation and borrowing costs.

Elsewhere, ratings agency Fitch raised its estimate for India's economic growth for this fiscal year and next due to strong domestic demand and persistent growth in business and consumer confidence levels, but tempered its view on rate cuts. HIGHLIGHTS:

** Bank of Korea cautious in final stage of inflation fight ** POLL- Pakistan cenbank expected to hold rates on Monday, cut in Q2 2024

 

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)