Nov 1 (Reuters) – Trading across most emerging markets was tepid on Wednesday, with investors staying on the sidelines ahead of the highly-anticipated U.S. Federal Reserve rate decision, as they assessed factory activity data from local economies.
MSCI’s index tracking EM stocks .MSCIEF was unchanged, while a basket of developing markets currencies .MIEM00000CUS edged down 0.1% by 0902 GMT.
Economists widely expect the Fed to leave benchmark borrowing rates unchanged in the range of 5.25% and 5.5% at its decision due at 1800 GMT.
Following a recent surge in U.S. Treasury yields that pressured emerging markets stocks and currencies in October, investors are especially keen on the central bank’s outlook.
“With markets fully priced for an unchanged rate decision and no updated economic projections, all eyes will be on Powell’s forward guidance,” Danske Bank analysts wrote in a note.
Disappointing October manufacturing activity data across emerging economies also tempered risk sentiment.
Indian stocks .NSEI dipped 0.4% and the rupee INR= was flat after data showed October manufacturing growth slowed for a second straight month in October as demand eased.
“We think that the sector will continue to slow over the coming months as the impact of higher policy rates continues to be felt and external demand weakens,” said Thamashi De Silva, assistant India economist at Capital Economics.
Turkey’s lira TRYTOM=D4 traded at 28.3 to the dollar after domestic factory activity contracted for a fourth consecutive month in October as firms struggled to secure new business and scaled back production.
The domestic BIST 100 index .XU100 shed 0.2%, with banks .XBANK slipping 0.2% after Finance Minister Mehmet Simsek said the country will move to inflation-adjusted accounting, but financial institutions may be excluded from the practice.
Meanwhile, South Africa’s rand ZAR= slipped 0.4% ahead of the local Medium-Term Budget Policy Statement (MTBPS) in parliament, which is due at 1200 GMT.
China’s blue-chip index .CSI300 and Hong Kong’s Hang Seng index .HSI closed the session flat, after latest private survey added to Tuesday’s data which renewed concerns over the country’s sprawling manufacturing sector.
In central and eastern Europe, most currencies traded tepidly against the euro, as markets in Poland and Hungary were closed on account of a public holiday.
Czech’s crown EURCZK= weakened 0.2% after a survey showed factory activity edged up to 42 from the month before, but stayed in contraction territory for the 17th month.
(Reporting by Johann M Cherian in Bengaluru; Editing by Varun H K)
