April 5 (Reuters) – Emerging market stocks dipped on Friday, tracking overnight weakness on Wall Street, as hawkish commentary from Federal Reserve officials dampened risk sentiment and tensions in the Middle East kept investors on edge.
The MSCI’s index for emerging market stocks .MSCIEF fell 0.3% but was still on track for marginal weekly gains.
Emerging market debt saw its first weekly inflow for eight weeks and EM stocks saw inflows of $3.8 billion in the week ended on Wednesday, according to a note by BofA Global Research.
The currencies index .MIEM00000CUS was flat by 0900 GMT.
“The risk-reward profile of global risk assets is not attractive,” Arthur Budaghyan, chief emerging market and China strategist for BCA Research, said in a note.
“Higher U.S. bond yields and rising oil prices might spoil the party.”
Minneapolis Fed Bank President Neel Kashkari said that at the U.S. central bank’s meeting last month he pencilled in two interest rate cuts this year – but if inflation continues to stall, none may be required by year-end.
Traders were also hesitant to take on new positions ahead of Friday’s closely-watched U.S. nonfarm payrolls report, while rising geopolitical tensions added to worries.
Prime Minister Benjamin Netanyahu’s comments that Israel would harm “whoever harms us or plans to harm us” stoked fears of a wider war, after its presumed air strike on Iran’s embassy in Damascus earlier this week.
The Israeli shekel ILS= jumped 0.7% against the dollar, while stocks in Tel Aviv .TA125 shed 1.6%.
Meanwhile, the Hungarian forint EURHUF= led gains against the euro among Central and Eastern European peers, up 0.4% after a raft of economic data.
Hungary’s industrial output rose by an annual 1.8% in February, based on preliminary unadjusted data, compared with a 3.6% fall in January, while another survey showed calendar-adjusted retail sales rose by an annual 1.1% in February following a 0.6% rise in January.
The forint and Poland’s zloty EURPLN= were on track for their second straight week of gains.
Hong Kong’s Hang Seng index .HSI closed nearly flat, while stocks in mainland China were closed and will resume trade on April 8.
In India, stocks were range-bound after the central bank kept its key interest rate unchanged for a seventh straight policy meeting as growth is expected to remain robust while inflation stays above the 4% target.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Kevin Liffey)
