Stocks drop as investors await U.S. inflation data
written by Bella Palmer
The MSCI's gauge of emerging market stocks was 0.2% lower, while a basket of currencies slid 0.1% against a broadly steady U.S. dollar
Emerging market stocks dropped on Tuesday as investors awaited U.S. inflation data this week for hints on the timeline of interest rate cuts, while the Polish zloty was steady ahead of a key central bank decision.
The MSCI's gauge of emerging market stocks was 0.2% lower at 0943 GMT, while a basket of currencies slid 0.1% against a broadly steady U.S. dollar.
Emerging market assets had a weak start to new year, with the wider stock index having its worst weekly start since 2016 as investors' appetite for risk assets took a plunge on fading optimism around early interest rate cuts.
U.S. economic data came in mixed on Friday and market participants are now shifting their attention to U.S. inflation data due on Thursday for more clarity on the trajectory of borrowing costs.
Across Asia, stocks were mixed. Hong Kong shares dropped 0.2% and South Korea's Kospi index declined 0.3%, while China's blue chip index added 0.2%, snapping a five-day losing streak.
Chinese tourism firms stocks advanced with the CSI Tourism Thematic Index climbing 3.8% as winter tourism in the country has rebounded sharply offering a bright spot for the struggling economy.
The Polish zloty was stable ahead of Poland's monetary policy decision later in the day at which the central bank is expected to keep rates unchanged at 5.75%.
We expect them (National Bank of Poland) to hold rates where they are at the moment, said Nick Rees, FX market analyst at Monex.
They are waiting to see what the new government's spending plans look like, especially the impact those are going to have on inflation, Rees said.
In Hungary, the government will launch new economic stimulus programmes to boost domestic industry and revive economic growth, the Economy Ministry said on Tuesday after November output data came in sharply below expectations.
Hungary's forint slipped 0.3%.
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