Stocks Tumble Following April U.S. Inflation Surge: EM Review

Emerging-market stocks had their worst week since February as higher-than-expected inflation in the U.S. revived concern of tighter monetary policy worldwide, even as commodity prices came of their recent highs. A gauge for developing-world currencies halted a five-week rally, closing the week little changed after gaining Friday as the dollar retreated.

Highlights:

  • China’s most widely-followed stock index tumbled into a bear market after a selloff in some of the nation’s biggest technology firms. The onshore yuan advanced to its strongest level since 2018 as the currency defied attempts by the central bank to slow its gains amid an improving outlook for the economy
  • U.S. consumer prices climbed in April by the most since 2009, topping forecasts and intensifying the already-heated debate about how long inflationary pressures will last
  • Hong Kong will freeze the assets of media tycoon and pro-democracy activist Jimmy Lai under its controversial national security law, the latest move to crack down on one of the city’s prominent opposition figures
Asset moves as of 4:20 p.m. in

New York

Weekly
MSCI EM stocks index-3.04%
MSCI EM FX index-0.04%

Bloomberg Barclays global EM local-currency bond index

(Up to Thursday)

-0.2%

Asia:

  • The Philippine and Malaysian economies continued contracting in the first three months of the year, adding to signs that some of Southeast Asia’s biggest nations are struggling amid a resurgence in coronavirus cases
  • The onshore yuan advanced to its strongest level since 2018 as it defied attempts by the central bank to slow its gains amid an improving outlook for China’s economy
    • China’s factory-gate prices surged more than expected in April, fueled by rapid gains in commodity prices, adding to global inflation concerns
  • India’s capital extended its lockdown for another week and adopted stricter restrictions to control a new wave of Covid-19 infections. Investors are bracing for market fallout.
  • The Philippine central bank kept its key interest rate at a record low after a disappointing economic performance last quarter and as price pressures cooled

EMEA:

  • Turkey’s current account remained in deficit for a 17th month. The deficit was $3.33 billion in March compared with $2.59 billion in the previous month and $5.45 billion a year earlier, the Turkish central bank said on its website on Tuesday
  • Israel’s forces fired artillery into the Hamas-run Gaza Strip on Friday and kept up a blistering five-day air assault that has so far failed to quell militant rocket attacks, sweeping aside international appeals for de-escalation
  • Russia’s debt chiefs are working on a mechanism that will allow the government to retire costly ruble bonds sold to raise emergency funds during the coronavirus pandemic
  • South Africa is on the brink of a third wave of coronavirus infections, after a four-day holiday weekend that saw millions of people travel to see family and friends and attend religious gatherings

LatAm:

  • The group of rich government creditors known as the Paris Club is willing to delay a $2.4 billion debt payment from Argentina due this month if the nation meets certain conditions, potentially averting a damaging default, according to three people with direct knowledge of negotiations. The nation’s inflation accelerated more than economists expected for a second consecutive month in April
  • Colombia’s economy grew much faster than expected at the start of the year, with record low interest rates supporting a revival in domestic demand. Still, the nation faces a “grim” outlook this year due to social unrest and a surge in Covid-19 infections, according to the central bank’s newest co-director
  • Peru held borrowing costs at a record low, fulfilling its pledge to keep supporting the pandemic-ravaged economy for an extended period. The two candidates competing in the presidential runoff scheduled for June 6 are now on a technical tie, the latest poll shows
  • This weekend Chileans will elect members of the body that will rewrite the country’s constitution, a key demand stemming from a period of civil unrest in late 2019. Meantime, the central bank held its benchmark interest rate at a record low and said borrowing costs would stay at that level as long as needed for the economic recovery to strengthen

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.