Reuters/London
Emerging stocks touched new seven-month lows yesterday, led by steep falls in major oil-exporting markets after another slide in the oil price and persistent concerns about the global economic recovery.
MSCI’s emerging equity index slipped 0.9% after the previous day’s 1% fall, sparked by a Wall Street rout and flight to safe-haven bonds after disappointing US data reinforced worries about the global economy. Most Asian bourses posted heavy falls.
With the price of oil continuing to slump, hitting its lowest level in four years, Middle Eastern markets fell hard, led by Saudi Arabia where stocks dropped 5.5%.
The Mexican peso had hit two-year lows on Wednesday and stocks slipped 1% .
“The market now wants to see what central bankers at the US Federal Reserve, Bank of Japan and European Central Bank can do to calm the markets. What (markets are) waiting for is some verbal support saying they will act if the market gets worse,” Pravdova added.
The weak oil price, now trading below $83 a barrel, is adding pressure on Russia’s rouble which has been punished as Western sanctions on Russia over the Ukraine crisis have restricted Russian companies’ access to capital markets.
The rouble was 0.9% weaker against the dollar-euro basket, falling past levels used by the central bank to gauge the currency’s nominal exchange rate.
Russia’s central bank said yesterday it had shifted the boundaries of the rouble’s trading band by 25 kopecks the previous day, following market interventions to curb the pace of the currency’s decline.
“The future prospects for the rouble will be determined by oil prices, and only their stabilisation combined with growing sales (of foreign currency) from exporters ahead of the tax period could strengthen a corrective trend,” Dmitry Polevoy, an ING Bank economist in Moscow, said in a note.
Greek stocks, which suffered their biggest one-day loss since the height of the euro crisis on Wednesday due to concerns about possible early elections and Athens’ plans to wean itself off international aid, continued to fall yesterday although less sharply. They were down more than 1%, adding to an 11.5% slide over the previous two days.
Weaker oil prices are also weighing on African sovereign debt, with Nigeria’s 2023 US dollar denominated bonds marginally lower. Ghana’s 2023 bond was harder hit, dropping 0.125 of a cent.
Ghana cut its economic growth forecast slightly for this year, to 6.9%, on Wednesday as it grapples with inflation and a sharp fall in its currency. The government is in talks with the International Monetary Fund on a possible financial assistance programme that could begin in January.