March 6 (Reuters) – Emerging market stocks rose on Monday as U.S. Treasury yields dipped ahead of commentary from Federal Reserve Chair Jerome Powell later in the week, but gains were limited as a modest 2023 growth target by China disappointed investors.
The MSCI EM equities index .MSCIEF started the week on a positive note, rising 0.6%, with investors awaiting Powell’s testimony to Congress on Tuesday and Wednesday for an update on the central bank’s monetary policy path.
The index hit a rough patch in February as signs of economic resilience in the United States stoked concerns of more rate hikes by the U.S. central bank, but recent commentary from some Fed officials has calmed jitters, leading to a pullback in U.S. Treasury yields.
Bucking the trend on Monday, stocks in China .CSI300 slid 0.5% after the world’s second largest economy set a modest target for 2023 GDP growth of around 5% on Sunday as it kicked off the annual session of its National People’s Congress.
It was at the low end of expectations, as policy sources had recently told Reuters that a range as high as 6% could be set.
“In particular, the central government (in China) probably doesn’t want to put too much pressure on local governments to boost economic growth given the financial stress they are facing,” said Tommy Wu, senior economist at Commerzbank.
“From a more cautious viewpoint, the unambitious growth target points to a more subdued outlook. It may also signal that the government is likely to implement more moderate policy easing than before.”
Regional currencies .MIEM00000CUS rose 0.1% as the dollar index .DXY edged lower.
The Turkish lira TRYTOM=D3 was flat against the dollar with the main opposition alliance expected to announce their candidate to challenge President Tayyip Erdogan in the upcoming election later in the day.
South Africa’s rand ZAR= edged 0.1% lower against the greenback ahead of a cabinet reshuffle expected this afternoon, where President Cyril Ramaphosa is likely to name a new deputy.
In central and eastern Europe, the Hungarian forint EURHUF= was up 0.3% against the euro. Calendar-adjusted retail sales in Hungary plunged 4.5% year-on-year in January following a revised 4.1% drop in December.
The Polish zloty EURPLN= was flat against the euro.
Elsewhere in emerging markets, Indian shares gained on Monday, with Adani group stocks extending gains after GQG Partners’ investment in the conglomerate last week.
(Reporting by Shubham Batra and Amruta Khandekar in Bengaluru; Editing by Varun H K)
