Emerging market stocks, FX hit by oil-fuelled inflation and debt worries
EEM•Emerging market assets fell as rising bond yields and oil prices stoked inflation fears and sovereign-debt concerns. The developing-world equities index dropped 1.7%, currencies index slipped 0.1%, and Brent rose nearly 4% to $104.
1. Assets fall as yields rise
Emerging market assets dropped on Thursday as rising bond yields and oil prices stoked inflation fears and highlighted concerns over elevated sovereign debt. The developing-world equities index fell 1.7%, led by rate-sensitive stocks, while its currencies index dipped 0.1%.
2. Financials among laggards
Currencies of net oil importers including the Philippine peso and South African rand declined, while the Indian rupee was near a record low. Brent crude rose nearly 4% to $104. Higher yields weighed on rate-sensitive financials: Singaporean and Hungarian equity indexes shed about 3% each, while India's financials index and Turkish banks fell more than 1.5%.
3. Policy and Pakistan financing
Investors awaited rate decisions from Romania and Serbia, with economists polled by Reuters anticipating no change, and commentary from Poland's central bank after it flagged inflation risks. Emerging markets recorded $26.3 billion in outflows in September. Separately, the IMF reached a staff-level agreement with Pakistan that could unlock about $1.21 billion in financing.
