Emerging Markets Fall Ahead of FOMC

Emerging-market stocks fell for an eighth day and currencies slid on speculation the U.S. is moving closer to raising interest rates and on signs China’s economy is slowing. Russia’s ruble weakened to a record for a third day.

The MSCI Emerging Markets Index decreased 0.8 percent to 1,053.12 at 12:24 p.m. in London, set for the longest rout since the 10-day period ended Nov. 13. China Life Insurance Co. (2628) helped drag Hong Kong-traded Chinese shares to a five-week low. Russia’s benchmark Micex Index retreated as much as 1.2 percent, while stock markets in the Czech Republic and Saudi Arabia lost at least 0.8 percent.

Data on Chinese industrial production and retail sales over the weekend missed estimates, underscoring the risks of a deeper slowdown. Some of the factors that becalmed developed nations are raising risks for emerging markets, the Bank for International Settlements said.

“The overarching theme in terms of weakness in emerging markets of late has been the interest rate/currency nexus: the substantial move of the dollar and U.S. interest-rate expectations,” John Lomax, an emerging-market strategist at HSBC Holdings Plc, said by phone from London. “The sanctions environment remains a constraint on the outlook for the Russian equity market.”

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza