(There will be no EMEA-focused emerging market report on Friday and Monday on account of Easter holidays. Reuters will resume coverage on Tuesday, April 6)<\/p>\n
* Asia, Russia, Turkey factory activity picks up in March<\/p>\n
* Currencies slip as higher U.S. bond yields lift dollar<\/p>\n
* South African rand clings to gains from strong trade data<\/p>\n
* Russian rouble slips ahead of OPEC+ meeting on production cuts<\/p>\n
April 1 (Reuters) – Emerging market stocks began the second quarter with strong gains on Thursday as data signalled a steady global economic recovery from a coronavirus-driven recession, while currencies eased under pressure from a firmer dollar.<\/p>\n
A basket of emerging market equities jumped about 1.1% to a one-week high as data from Asia, Russia and Turkey showed a pickup in factory activity last month, although rising costs are creating new challenges for businesses.<\/p>\n
The MSCI index of emerging market currencies , on the other hand, was down 0.1% by 0730 GMT after ending Wednesday with its steepest monthly fall since the global financial market meltdown in March 2020.<\/p>\n
Stocks and currencies in the developing world have been hammered this year as expectations that a U.S. economic recovery would outpace that of other developed countries have sent U.S. bond yields to one-year highs and powered the dollar.<\/p>\n
A recent Reuters poll found emerging market currencies would pare only some of their recent losses over the coming year, adding that another sell-off was likely in the next three months on the back of the so-called U.S. \u201creflation trade\u201d.<\/p>\n
The South African rand, one of the highest-yielding currencies in emerging markets, rose another 0.2% against the dollar a day after strong domestic trade data helped it firm about 1%.<\/p>\n
\u201cThe strong goods trade balance reflects a cyclical recovery in commodity prices across the world and subdued demand for imports in the domestic economy due to the aftermath of the COVID-19 shock and aggressive fiscal consolidation plans,\u201d Credit Suisse analyst Alexey Pogorelov said.<\/p>\n
\u201cA robust external balance is one reason behind the rand\u2019s resilience to higher global yields and portfolio outflows.\u201d<\/p>\n
The Turkish lira firmed 0.8% as data showed manufacturing activity grew in March as new orders began to improve, while growth in output and employment continued in the sector.<\/p>\n
A shock central bank overhaul sent the lira crashing 10% last month, exacerbating fears of higher inflation. A Reuters poll on Wednesday found inflation is expected to have jumped to 16.11% in March, rising for a sixth straight month.<\/p>\n
Weekly data on Turkey\u2019s forex reserves is due at 1130 GMT.<\/p>\n
The oil-linked Russian rouble fell 0.2% ahead of a meeting of OPEC and its allies later on Thursday to decide on maintaining production cuts amid a resurgence in COVID-19 infections in some regions.<\/p>\n
Although market participants expect OPEC to maintain the status quo on production cuts, that could still support oil prices and the rouble, said Antje Praefcke, FX analyst at Commerzbank.<\/p>\n
For GRAPHIC on emerging market FX performance in 2021, see tmsnrt.rs\/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see tmsnrt.rs\/2OusNdX<\/p>\n
For TOP NEWS across emerging markets<\/p>\n
For CENTRAL EUROPE market report, see<\/p>\n
For TURKISH market report, see<\/p>\n
For RUSSIAN market report, see<\/p>\n