Emerging stocks fell for a third day and many currencies were under pressure, weighed down by a stronger dollar and jitters over trade protectionism as markets digested the recent rally.
MSCI’s emerging market benchmark declined 0.3% in a third day of falls, pulled lower by heavyweight South Korea where stocks fell 0.5% while bourses from Turkey to South Africa chalked up losses.
Markets were jittery following a Reuters report saying Canada increasingly believes US President Donald Trump will soon announce his intention to withdraw from the North American Free Trade Agreement (Nafta) treaty.
Emerging currencies painted a mixed picture on the day against a stronger dollar. South Africa’s rand weakened 0.3% in a second day of losses after the new leadership of the ruling ANC said on Wednesday it did not discuss President Jacob Zuma’s future, disappointing investors who hoped the party would seek to remove him from power.
Mexico’s peso weakened for a fourth straight session over concerns for the future of Nafta.
But Russia’s rouble eked out small gains, propped up by rising crude oil prices while the Thai baht hit a 3-1/2 year high.
However, currencies such as the yuan, the rand, the rouble, the peso and Turkey’s lira were all on track for weekly losses following a multi-week rally.
In emerging Europe, Serbia’s central bank was expected to keep rates on hold at 3.5% thanks to a strong currency and tame inflation.
Hungary’s central bank chief said interest rates must stay at a record low of 0.9% to reach the central bank’s 3% target by mid-2019. Budapest also announced it would hold its 2018 parliamentary election on April 8.
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