Shares begin September on upbeat note; dour PMIs cap gains

PUBLISHED: Wed, 01 Sep 2021 13:14:19 GMT
Susan Mathew
Reuters
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Key Points
  • Asian, Russian manufacturing PMIs fall
  • Turkey GDP grows 21.7% in Q2
  • Indian shares hit all-time highs

Sept 1 (Reuters) – Emerging market shares rose for a fourth straight session on Wednesday as heavyweight Chinese companies made healthy gains, although waning optimism about global economic growth kept sentiment in check.

Dour manufacturing PMIs from most of Asia as well as Russia on weak demand and supply disruptions from coronavirus restrictions worried investors about the ability to tide over a pandemic induced slump.

The Chinese yuan slipped slightly as did most other Asian units. Russia’s rouble, however, hit two-week peak, aided by rising oil prices. The greenback edged higher but stayed close to three-week lows.

“More signs of growth jitters could be weighing a tad on regional FX sentiments, but given potential easing of production drags from re-opening in various (Asian) economies, the extent of dampening in confidence could be contained,” Maybank strategists said.

Meanwhile, Turkey’s lira firmed 0.3% against the dollar after data showed the economy grew a massive 21.7% year-on-year in the second quarter, while PMIs showed factory activity grew in August.

In Poland, manufacturing grew but at a slower pace. The Polish zloty stayed close to eight week highs against the euro.

MSCI’s index of EM currencies was flat around more than two-month highs, while its stocks counterpart rose 0.1% after posting its best month since January.

The PMIs, combined with sluggish rise in new home prices in China, raised expectations of easing monetary policy there, and sent Chinese blue-chips up 1.3% after two days of losses.

“While there is some room for the fiscal and monetary policy to catch up a bit to ease the slowdown pains (in China), the economic policy alone is insufficient to help turn around the economy,” warned Commerzbank Senior Economist Hao Zhou.

Turkey shares hit over five-month highs, while Russia’s MOEX narrowed its gap to record highs to 0.4%.

Middle East and African stocks were flat to lower. The chief executive of beleaguered state-owned utility Eskom warned that coal power generation could see South Africa face “another era of isolation”.

Indian shares steadied after hitting all-time highs, propelled by data showing the economy grew more than 20% in the April-June quarter.

Overnight, Chile’s central bank doubled the benchmark interest rate to 1.5%, topping expectations. The currency underperformed its Latin American peers last month primarily due to volatility in metal markets on concerns over local copper supply.

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

(Reporting by Susan Mathew in Bengaluru; editing by Uttaresh.V)

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