EMERGING MARKETS

EMERGING markets stocks slumped to their worst day in nearly one month on Friday due to concerns about rising Covid-19 cases but clocked their second week of gains on hopes of a gradual, stimulus-induced pick up in global economic activity.

The mood remained largely off risk in Asia, with Chinese stocks halting a rally that kicked off on June 29 as state media discouraged retail investors from pushing the market higher and worries about China-US friction.

The US on Thursday imposed sanctions on the highest-ranking Chinese official yet over alleged human rights abuses against the Uighur Muslim minority.

“What looked to be a minor case of indigestion in Asia might turn into a full-blown heartburn attack,” said Stephen Innes, chief global market strategist at AxiCorp.

The MSCI’s index for emerging market stocks fell 1 percent, on worries of coronavirus as more than 60500 new C0vid-19 infections were reported across the US on Thursday, setting a one-day record.

“Waking up to the snarly US Covid19 headline shock... one can’t help but feel overly compelled to reduce risk,” Innes added.

The index, however, recorded its second weekly rise as investors continued to bet on more fiscal and monetary stimulus to steer the global economy out of the healthcare crisis.

Russia’s rouble fell 0.3 percent while the Turkish lira traded flat.

Data showed, Turkey’s unemployment rate fell to 12.8 percent in the March-May period from 13.2 percent a month earlier, falling despite an economic slowdown driven by measures to counter the coronavirus outbreak.

The Polish zloty edged higher against the euro, remaining in focus for investors ahead of a presidential election yesterday.

Analysts at Commerzbank said political environment would elevate risk with the election deferred from May still underway.

“In the 2019 general election, ruling PiS lost the senate. The loss of senate will likely make PiS eager to regain ground by maintaining high spending, which will deteriorate the longer-term fiscal outlook.”

Other central and eastern European currencies including Hungary, Romania and the Czech Republic were higher against the euro.

Meanwhile, Nigeria naira fell to 463 on the black market on Thursday from 461 the previous session. I Reuters