Stocks, FX poised for monthly declines; China data assessed

Reuters

Stocks, FX poised for monthly declines; China data assessed

2024 10월 31 일, 오전 10:04 GMT

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Updated at 0903 GMT

Forint leads monthly declines in CEE region

Ukraine interest rate decision, Maldives budget awaited

IMF projects 4% growth rebound in MENA in 2025

MSCI EM stocks index down 0.4%, FX up 0.1%

By Johann M Cherian

Oct 31 (Reuters) -Currencies and equities across emerging markets were set to end the month on a lacklustre note on Thursday, while traders also assessed economic data out of China and Poland and awaited an interest rate decision out of Ukraine.

MSCI's index tracking equity indexes in developing markets .MSCIEF slipped 0.4% and was set for a decline of 4.2% in October - its biggest monthly loss since January this year.

A gauge for currencies .MIEM00000CUS was flat, but was on track for its steepest one-month drop of 1.6% in 20 months. Currencies of China CHN=, India INR=IN, Turkey TRYTOM=D3, South Africa ZAR= and those of most central and eastern European economies were also trending lower this month.

Traders took a risk off stance as initial optimism around China's massive stimulus measures gave into uncertainty around U.S. elections, which consequently strengthened the dollar.

Prediction markets such as PredictIt are pointing to a win for Republican Donald Trump next week, although he's neck and neck with Democrat Kamala Harris according to several polls.

The former president's domestic policies are seen as more inflationary and his proposed tariff measures could undermine some developing economies and their assets.

Meanwhile, Chinese equities .CSI300, .SSEC closed flat to slightly higher after manufacturing activity expanded for the first time in six months and services picked up in October, indicating that latest stimulus measures are helping the world's second largest economy turn a corner.

"Moving forward we'll need to see if the stimulus rollout can lead to a recovery of domestic demand to offset potentially softer external demand picture, which could be even less favourable if we do see a Trump victory next week and a subsequent escalation of tariffs," said Lynn Song, chief economist, greater China at ING Bank.

In central and eastern Europe, Hungary's forint EURHUF= was set for the steepest monthly declines among peers of about 3%. Data a day earlier showed the domestic economy contracted over the previous three months as the local central bank stayed cautious on interest rate cuts.

Poland's zloty EURPLN= edged up 0.1% after data showed inflation in October was broadly in-line with expectations.

South Africa's rand weakened 0.4% as investors awaited the finance minister's answers to lawmakers' questions on his mid-term budget presented on Wednesday where he projected wider deficits.

The International Monetary Fund said growth in the Middle East and North Africa region could rebound to 4% next year, but will hinge on a phase out of oil production cuts and headwinds subsiding, including from conflicts.

Elsewhere, Ukraine's hryvnia EURUAH= was flat ahead of a central bank interest rate decision, while Maldives rufiyaa MVR= was muted ahead of a budget presentation by the archipelago nation's president.

For GRAPHIC on emerging market FX performance in 2024 http://tmsnrt.rs/2egbfVh

For GRAPHIC on MSCI emerging index performance in 2024 https://tmsnrt.rs/2OusNdX

Reporting by Johann M Cherian in Bengaluru; Editing by Toby Chopra

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