Stock market report. 3d illustration

Nov 8 (Reuters) – Emerging markets stocks and currencies extended declines on Wednesday on fresh fears of further interest rate hikes in the U.S. following a hawkish tone from Fed policymakers, while investors awaited monetary policy decisions of Poland and Romania.

The MSCI index tracking emerging markets equities .MSCIEF fell 0.3% by 0944 GMT.

Fresh from last week’s decision to hold the policy rate steady, Fed policymakers are weighing strong economic data and the impact of higher long-term bond yields as they consider whether they will need to hike rates further to bring down inflation.

Investors will keenly watch Fed Chair Jerome Powell’s speech, due later in the day, for cues on the interest rate path.

The dollar index =USD gained 0.3% having fallen last week.

“The dollar rebound has started to gain some momentum. What has likely offered a hand to the greenback was the generally hawkish comments by Fed members,” Francesco Pesole, FX Strategist at ING said in a note.

Emerging markets currencies .MIEM00000CUS slipped 0.1% against a firm dollar as the South African rand ZAR= declined 0.7% ahead of Powell’s speech.


The won KRW=KFTC also fell 0.7%, after gaining earlier in the session, as South Korean authorities announced plans to open the local currency market to global traders and extend trading hours.

Emerging market assets had a bright start to November following the Fed decision as markets bet that U.S. interest rates had peaked, but fresh rate hike fears have worsened risk appetite.

The spotlight will be on Central and Eastern Europe, with crucial interest rate decisions due later in the day from the central banks of Poland and Romania.

The National Bank of Poland is widely expected to cut its main interest rate by 25 basis points to 5.50%, while the Romanian central bank is seen keeping interest rates steady at 7.00%, according to a Reuters poll.

Central Europe’s currencies face depreciation pressures over the next year amid interest rate cuts and dwindling carry appeal, a Reuters poll showed.

Against the euro, the zloty EURPLN= was flat, while the leu EURRON= edged down 0.1%


Broader equities was further hurt with South Korean shares .KS11 falling nearly 1%, extending declines from the previous session.

China’s blue-chip stocks .CSI300 dipped 0.2%, while Hong Kong shares .HSI dropped 0.6%.

Chinese authorities have asked Ping An Insurance Group 2318.HK to take a controlling stake in embattled Country Garden 2007.HK, the nation’s biggest private property developer, Reuters reported on Wednesday.

Shares of Ping An sank 5.4%, while Country Garden jumped 12.2%.

On the data front, Hungary’s calendar-adjusted retail sales HURETY=ECI fell by an annual 7.3% in September following an 7.1% drop in August.

The Czech unemployment rate eased to 3.5% of the workforce in October, below a Reuters poll forecast for it to stagnate at 3.6%.


(Reporting by Siddarth S in Bengaluru; Editing by Toby Chopra)