Emerg­ing stocks sub­merged, UK gears up for 'Su­per Thurs­day'

The Pak Banker - - INTERNATIONAL BUSINESS/SPORTS -

Emerg­ing mar­ket stocks slipped to their low­est in over two years on Thurs­day as ner­vous­ness about an end to record low U.S. and global in­ter­est rates and con­tin­ued weak­ness in com­mod­ity mar­kets took their toll.

Many in­vestors were keep­ing their moves small ahead of cru­cial U.S. jobs data on Fri­day but there was plenty go­ing on to dis­tract them while wait­ing. The Swiss franc fell to its low­est in five months against the euro, as in­vestors sensed that its cen­tral bank may have to ease pol­icy, while UK mar­kets were gear­ing up for what has been dubbed 'Su­per Thurs­day' at the Bank of Eng­land.

For the first time in its history, the Bri­tish cen­tral bank will si­mul­ta­ne­ously pub­lish its in­ter­est rate de­ci­sion, the break­down of how pol­i­cy­mak­ers voted and a sum­mary of their de­bate, and its quar­terly fore­casts for Bri­tain's econ­omy, in­clud­ing in­fla­tion.

The re­lease is due at 1100 GMT (0700 EDT). De­spite in­fla­tion sit­ting at zero, at least two of the Bank's nine rate-set­ters are ex­pected to have de­cided that it is time to start wean­ing the econ­omy off cri­sis-era low rates af­ter two years of strong growth. "The first re­ac­tion will most likely be on the num­ber of dis­sent­ing votes, if any, and later on the new eco­nomic fore­casts," said Mar­shall Git­tler, head of global FX strat­egy at IronFX Global.

Lon­don's FTSE .FTSE was the weak­est per­former of Europe's ma­jor stocks mar­kets <0#.INDEXE>.FTEU3, which saw a largely sub­dued start to the day.

The pan-Euro­pean FTSEurofirst 300 in­dex .FTEU3, which rose 1.3 per­cent in the pre­vi­ous ses­sion, fell back 0.4 per­cent as weak oil prices also weighed on energy stocks. But amid com­modi­ties weak­ness and the on­go­ing un­cer­tainty about the tim- ing and im­pact of the first U.S. rate hike in al­most a decade, it was emerg­ing mar­kets that re­mained the big­gest con­cern.

MSCI's bench­mark emerg­ing mar­kets in­dex .MSCIEF hit its low­est level since mid-2013 as fresh losses in China, large parts of Asia and Rus­sia once again weighed.

The pres­sure con­tin­ued to crank up on Malaysia. The ring­git hit a fresh 17-year low and some lo­cal bond prices fell, in a sign of de­clin­ing con­fi­dence among for­eign in­vestors in the face of po­lit­i­cal un­cer­tainty and low com­mod­ity prices.

"If weak­en­ing pres­sure on MYR per­sists, we can def­i­nitely not ex­clude the pos­si­bil­ity of FX out­flow re­stric­tion," said Amy Yuan Zhuang, a se­nior an­a­lyst at Nordea in Sin­ga­pore.

Saudi Ara­bia's stock mar­ket fell as Brent oil traded be­low $50 a bar­rel, once again de­press­ing in­vestor sen­ti­ment across the Gulf re­gion.

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