(Bloomberg) -- A selloff in emerging markets deepened as Argentina and Turkey struggled to shore up global investor confidence.
The peso tumbled to a record low, prompting Argentine policy makers to boost rates to 60 percent. In Turkey, a report that the central bank’s deputy governor was set to resign sank the lira. South Africa’s rand volatility soared amid a controversial land reform debate. An expanded foreign-exchange intervention in Brazil brought some relief to both the real and its peers. A little later currencies extended losses as President Donald Trump was said to move ahead with a plan to impose new tariffs on China as soon as next week.
Emerging markets got pummeled again amid concern that Argentina and Turkey’s struggles to restore investor confidence will pressure their economies further -- while embroiling the rest of the developing world. That comes at a really bad time when considering the other challenges that investors face -- the end of an era of cheap money, prospects of a global trade war, American sanctions and deep political uncertainties in places such as Brazil.
“These currencies are infecting emerging markets,” said Shamaila Khan, director of emerging-market debt at AllianceBernstein in New York, referring to the Turkish lira and the Argentine peso. “There will be volatility around headlines and today is one of the negative days.”
Analysis:
- EM Assets Are ‘Quite Cheap’ and USD 15% Overvalued: StanChart
- Vanguard Sees More Emerging-Market Pain Creating Opportunities
- EM Investor Appetite Damped Again by Turkey, Argentina: ING
- Next Steps for Trump’s Trade Negotiations: Mohamed A. El-Erian
- Emerging-Market Debt Selloff Means Time to Buy: Payden & Rygel
Upcoming Friday:
- The Bank of Korea sets interest rates. Weak jobs growth has cooled speculation of a rate increase, but the central bank has indicated its next move is up.
- Bank of Russia First Deputy Governor Ksenia Yudaeva delivers a lecture on financial stability.
- Chile unemployment
- Brazil GDP, primary budget balance
- Colombia unemployment
- South Africa trade balance
- Kenya CPI
- South Korea industrial output
- China PMI
- India GDP
- For a list of the day’s biggest earnings releases, clickhere.
Latin America:
- ARGENTINA:
- Merval Index gained 5.2 percent to 26,730.54
- Peso fell 10.1 percent to 37.60 per dollar
- Central bank raised key 7-day Leliq rate to 60 percent
- Morgan Stanley (NYSE:MS) said peso depreciation will probably continue
- Moody’s said economic contraction could extend into 2019
- Goldman Sachs (NYSE:GS) said nation should consider fiscal adjustment shock
- Mauricio Macri’s administration has made "crucial" strategy mistakes, said Paul Greer, a money manager at Fidelity International in London
- IMF Mulls Argentina Plea to Speed Up Payments as Peso Slumps
- BRAZIL:
- Ibovespa declined 2.2 percent to 76,659.63
- Real dipped 1.4 percent to 4.16 per dollar
- 10-year local-bond yield advanced 38 basis points to 12.50 percent
- Treasury Secretary Mansueto Almeida said he expects this year’s deficit to be smaller than the target
- Brazilian Real Trims Drop Near Record as Central Bank Intervenes
- A Scramble in Brazil to Hedge Against Higher Rates a Likely Flop
- Market-friendly candidate Geraldo Alckmin is unlikely to advance to runoff presidential vote, according to Eurasia Group
- Lula Heir Competitive But No Shoo-in for Brazil Election
- MEXICO:
- Mexbol index fell 1.1 percent to 49,626.90
- Peso declined 1 percent to 19.1369 per dollar
- 10-year local-bond yield gained four basis points to 7.926 percent
- Nafta Talks to Continue as Trump Says They’re on Track for Deal
- Schroders’ Barrineau Sees Mexico Going From Wild Card to Haven
- Click for market news on ANDES
EMEA:
- TURKEY:
- Lira declined 2.8 percent to 6.6555 per dollar
- Fitch said nation’s banks may face negative rating actions
- Central bank Deputy Governor Erkan Kilimci will resign from role
- Turkey Must Look Back to Move Forward: Daron Acemoglu
- SOUTH AFRICA
- FTSE/JSE Africa All Share Index dipped 2.3 percent to 58,802.69
- Rand declined 2.6 percent to 14.733 per dollar
- 9-year local-bond yield gained 10 basis points to 9.038 percent
- Budget deficit in July was the biggest in at least 14 years
- Rand Price Swings Now Wilder Than During ANC Power Struggle
- S. Africa Banks Worry That Ideology is Trumping Economic Needs
- RUSSIA:
- MOEX Russia Index dipped 0.7 percent to 2,330.92
- Ruble declined 0.5 percent to 68.255 per dollar
- 10-year local-bond yield gained five basis points to 8.73 percent
- Central bank seen hiking rates 100 to 150 basis points if the ruble drops sharply, Bank of America (NYSE:BAC) said
- Deutsche Bank (DE:DBKGn) Touts Ruble Resilience Over Rand’s Vulnerabilities
- Click for market news on POLAND and HUNGARY
Asia:
- CHINA:
- Shanghai Composite Index fell 1.1 percent to 2,737.74
- Offshore yuan declined 0.7 percent to 6.8698 per dollar
- 10-year local-bond yield slid three basis points to 3.595 percent
- Trump wants to proceed with a plan to impose tariffs on $200 billion in Chinese imports as soon as next week
- Government urged U.S. to make "right decision" as tariffs near
- Round Two of MSCI China Addition Is Bigger Deal for Global Funds
- Fund Manager Followed by Thousands Goes All In China Stocks
- Yuan Trading Is Busier Than Ever as Trump Targets China’s FX
- China Banks Managing $16 Trillion Can’t Stop Talking About Risk
- INDIA:
- Sensex Index dipped 0.1 percent to 38,690.10
- Rupee declined 0.2 percent to 70.735 per dollar
- 10-year local-bond yield gained two basis points to 7.9322 percent
- Finance Ministry asked S&P to consider rating upgrade
- BlackRock said it sees buying case for India amid limited contagion
- Rupee is taking cues from oil as Brent hovers near $78 per barrel, said Anindya Banerjee, currency analyst at Kotak Securities in Mumbai
- Click for more on markets in ASIA