EMERGING MARKETS-Stocks, FX mixed as traders assess PMI data, 2025 outlook
| Thu, 02 Jan 2025 09:40:38 GMT*
Poland’s manufacturing PMI falls in December
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Turkish manufacturing sector nears stabilisation in December
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Asia factory activity slows in December
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EM stocks down 0.5%, currency index flat
By Lisa Pauline Mattackal
Jan 2 (Reuters) – Emerging market stocks and currencies were mixed on Thursday, as investors sifted through factory activity data for several economies and braced for the impact of Donald Trump’s presidency and likely higher-for-longer U.S. interest rates this year.
The euro strengthened 0.7% against Poland’s zloty after S&P Global Purchasing Managers’ Index (PMI) data showed the country’s manufacturing sector saw a further decline in December, dropping to 48.2 from 48.9 in November, marking the strongest deterioration since August.
The zloty, one of the best regional performers in 2024, gave back some gains made over the past two sessions of holiday-thinned trade. Meanwhile, the country’s main stock index jumped 1.5%.
The euro rose 0.4% against Hungary’s forint after December’s PMI reading rose but was well below the long-term monthly average.
The dollar dipped 0.1% against the Turkish lira on the day. Data showed Turkey’s manufacturing sector contracted at the slowest rate in eight months in December in a sign that the sector is nearing stabilisation.
MSCI’s index of international emerging markets currencies was little changed at 0911 GMT. The EM equities index lost 0.5%, falling to its lowest level in nearly four months, mostly dragged by Asian stocks.
Investors remained cautious as they returned from the New Year’s Day holiday, eyeing an uncertain emerging market outlook for 2025 with the Federal Reserve expected to take a more hawkish stance on policy easing in the world’s largest economy.
Additionally, incoming U.S. president Donald Trump’s tariff threats are expected to hit global trade and increase inflation, further strengthening the dollar and weighing on EM economies and assets.
“The markets seem to be opening the new year calmly, but it remains to be seen how long investors will keep their nerves under control, not least given the uncertain political situation,” said Olle Holmgren, SEB strategist.
Gains in the U.S. dollar and Treasury yields, primarily due to changes in the outlook for U.S. rates, hit emerging markets in the last few months of 2024.
The broader EM stocks and currency indexes ended December with their worst quarterly declines in over two years.
On the day, South Africa’s main stock index jumped 0.9%, while the rand was little changed against the dollar.
In Asia, data showed factory activity for several countries slowed in December, including in the world’s second largest economy China.
Most Asian stock indexes ended lower, with China stocks posting their worst New Year trading performance since 2016.
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(Reporting by Lisa Mattackal in Bengaluru; Editing by Eileen Soreng)
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