India Leads Timid Recovery From Emerging Markets' Bad Friday

Emerging Markets Gain Modestly After Ending Last Week Badly

Justin Carrigan

12 Mar 2019, 09:18 PM IST

India Leads Timid Recovery From Emerging Markets' Bad Friday

A man looks at a screen across the road displaying the Sensex on the facade of the Bombay Stock Exchange (BSE) building in Mumbai.

(Bloomberg) -- Emerging markets tiptoed their way into the new week with some modest gains, hoping that Friday was just a bad dream after the U.S., China and Europe each reminded investors of the worrisome global growth backdrop.

If it was any comfort, Treasury yields rose even after Fed Chairman Jerome Powell signaled again at the weekend that there’s no clear time limit to the central bank’s current pause on rates. Watch out for U.S. retail sales data later, because Powell also said there’s evidence spending "popped back" in January.

India Lead

India led the broadest emerging-market gains Monday as traders sought to shake off the aftermath of Friday’s risk-off shock. The rupee traded at its strongest level since January, the Sensex climbed more than 0.8 percent and the country’s domestic bonds were among the few winners in the fixed-income markets.

Expectations that India’s central bank will curb purchases just as the Modi government prepares to sell a record amount of debt may give bond investors pause. India watchers, by the way, should mark May 23 in their diaries. The country said over the weekend that’s the date election results will be unveiled after a six-week voting period.

FOMO

Chinese stocks also won back some of their lost ground. The Shanghai Composite carved out an advance of 1.9 percent, while the Shanghai Shenzhen CSI 300 Index of A shares jumped 2 percent.

Goldman said Sunday that so-called fear-of-missing-out among retail investors may propel the CSI 300 a further 50 percent higher. Let’s see how that sits with the flurry of data due Thursday, which includes industrial production and retail sales.

Back into Recession

Turkey’s lira was the biggest loser Monday as data showed the country predictably entered its first recession in a decade and a collapse in imports narrowed the current-account deficit. The country’s 10-year dollar bonds also retreated.