Emerging Markets Stumble Amid Deflationary Pressures and US Tariff Developments

Emerging market stocks have declined, notably impacted by Chinese and Hong Kong shares due to deflationary pressures. Meanwhile, fluctuating currencies and developments around U.S. tariffs have investors on edge. The focus remains on consumer confidence in China, Central European currency performances, and tariff-induced market volatility in the U.S.

On Monday, emerging market stocks witnessed a decline, with Chinese and Hong Kong shares under pressure due to deflationary concerns. The decline in stocks has been coupled with the slipping of most currencies, especially as global attention remains fixed on key developments regarding U.S. tariffs.

MSCI's EM stock index fell by 1.1% by 0850 GMT, with significant drops in Chinese bluechips and Hong Kong's benchmark, down by 0.4% and 1.9%, respectively. China's consumer price index fell dramatically in February, hitting the sharpest decline in 13 months, while producer price deflation persisted. Analysts at Citi indicated the possibility of price stabilization, contingent on domestic demand recovery.

Beijing has committed to bolstering consumption amidst a mounting trade conflict with the U.S. Meanwhile, Central and Eastern European currencies have shown weakness against the euro, and the Polish zloty fell 0.2%. In Africa, the South African rand weakened by 0.6% against the dollar, influenced by domestic fiscal policy issues. Investors remain cautious about potential U.S. economic slowdown and the market volatility spurred by President Trump's tariff actions.

(With inputs from agencies.)