Emerging Market Turmoil Amidst US Tariff Threats

Emerging market stocks and currencies fell as investor anxiety heightened over potential U.S. tariffs on Feb. 1. Trump considers excluding Canadian and Mexican oil imports from impending tariffs but is uncertain on new Chinese tariffs. EM assets face pressure amidst interest rate risks. Romanian budget plans under scrutiny.

In the financial landscape, emerging market stocks and currencies experienced declines on Friday, driven by investor apprehensions over looming U.S. tariffs, slated for Feb. 1. The market, already on edge from the week's escalating trade tensions and central bank decisions, saw further instability under the weight of these geopolitical concerns.

U.S. President Donald Trump, in his latest address, shared his decision will soon be made on possibly excluding Canadian and Mexican oil imports from upcoming 25% tariffs. Despite the speculative nature of potential tariffs, such as those targeting Chinese imports, markets remain volatile, with Aneeka Gupta from WisdomTree noting an increase in global market uncertainties.

Despite the mounting uncertainties, emerging market debt saw significant inflows this week, reaching $1.4 billion according to Bank of America. Meanwhile, EM sovereign debt issuance accounted for $4.5 billion. On currency fronts, the Hungarian forint and Polish zloty recorded declines against the euro, while South Africa's rand remained steady post its central bank's interest rate cut.

(With inputs from agencies.)