Fading oil, Deutsche woes weigh on EM stocks, currencies
Frankfurt (Sept 30) Emerging stocks and currencies booked more losses on Friday, tracking major bourses spooked by Deutsche Bank's woes, but developing countries' equities and some of the main currencies were still on track for monthly and quarterly gains.
MSCI's main emerging index fell 1.2 percent on the day with stock markets around the world well in the red amid concerns over the health of Germany's largest bank. The index was heading for a weekly loss, but a rally in previous weeks helped to lift it 1 percent higher for September in its fourth straight month of gains.
Emerging currencies suffered on the day. Russia's rouble weakened 0.5 percent against the dollar after oil prices slipped amid doubts that OPEC's first planned output cut in eight years, agreed earlier in the week, would lead to a substantial cut in output. South Africa's rand matched those falls, though both currencies had strengthened over the past month and were on track for their third straight quarter of gains.
U.S. data next week is set to keep investors on their toes, with September non-farm payroll numbers expected to provide more clues on Friday of the chance of a Federal Reserve interest rate hike in December, which is still seen at around 50-50.
"The positive sentiment towards emerging markets will continue well into the fourth quarter, the dollar is strong and it is a sell-dollar, buy-EM sort of market," said Per Hammarlund, chief EM strategist at SEB.
"But before payrolls, people always square up their positions and become more cautious, so I think we'll probably see a bit more of a sideways move next week."
Across central and eastern Europe bourses slipped, weighed down by a drop in financial stocks while currencies also felt the heat.
Polish stocks fell 0.3 percent on the day and more than 2 percent on the week while the zloty weakened 0.2 percent against the euro across both as a cabinet reshuffle put pressure on assets of the region's largest economy. "Poland had a new finance minister - I don't expect much policy change, it is more reflecting a power struggle within the government," said SEB's Hammarlund.
In Hungary, stocks fell 1 percent and the forint slipped 0.2 percent ahead of a referendum on the EU's migrant quotas due on Sunday.