By Susan Mathew
June 9 (Reuters) – Emerging market stocks fell for a sixth straight session on Wednesday, dragged down by tech heavyweights in South Korea and Taiwan, while currencies nudged higher with Poland’s zloty nearing a six-month high ahead of a central bank decision.
Mainland China shares ended the day higher after data showed factory gate prices rose at their fastest annual pace in over 12 years in May.
But MSCI’s index of EM shares fell 0.3% as stocks in South Africa, Taiwan and South Korea fell between 0.3% and 1%.
Focus is now on U.S. inflation data on Thursday to see if the economic rebound in the U.S. economy is picking up at a pace that could stoke inflation and prompt a change in the Federal Reserve’s easy monetary policy stance next week.
“While concerns about peak growth in the U.S. may have taken some wind out of the market’s sails, we think investors should look at other offsetting tailwinds,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
“We expect the cyclical recovery momentum to persist in the second half of the year, albeit with some bouts of volatility.”
With U.S. 10-year treasury yields falling to their lowest level and the dollar flat, most developing market currencies were unchanged or ticked slightly higher.
South Africa’s rand rose 0.3%. It fell 0.5% on Tuesday after the GDP data showed the economy slowed in the first quarter as expected.
Russia’s rouble also gained 0.3% to a near 11-month high ahead of an expected rate hike by the central bank on Friday.
Poland’s central bank is expected to maintain status quo, though markets are watching for more hawkish forward guidance amid rising inflation. The zloty climbed 0.2% against the euro, while other central and eastern European currencies held steady.
“Even in case of a symbolic rate hike, the real interest rate will remain clearly in negative territory over the coming quarters and will prevent a sustainable appreciation trend of the zloty medium-term,” said Commerzbank EM FX analyst Antje Praefcke.
In Latam, Peruvian socialist candidate Pedro Castillo held on to a narrow lead late on Tuesday in the country’s runoff to its presidential election, as tensions rose over contested ballots and accusations of fraud, sparking protests outside the elections office.
The sol held steady on Tuesday after hefty falls on Monday.
For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX
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For RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru; Editing by Rashmi Aich)
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