May 17, 2017 / 9:17 AM / 3 months ago

EMERGING MARKETS-Trump concerns snap winning streak

LONDON, May 17 (Reuters) - Concerns over the fate of promised U.S. fiscal stimulus caused emerging stocks to snap a seven-day winning streak on Wednesday, pushing them off two-year highs while many currencies weakened as investors sought safer assets.

Emerging assets did not benefit from the dollar hitting six-month lows and U.S. yields at two-week lows after media reports raised questions over whether obstruction of justice charges could be laid against U.S. President Donald Trump.

The reports weaken investors' belief that Trump can push through an aggressive stimulus programme they have been banking on since November's election.

"There is less and less clarity on what is going to happen in the United States, what the political landscape is going to be and what is going to be the agenda ... The two risks are if Donald Trump is under impeachment and a big retracement down on oil," said Societe Generale credit strategist Regis Chatellier.

"Overall emerging markets have had very good momentum. (But) the fact that oil is trending down doesn't help."

Oil prices tumbled more than 16 percent in April but have gained more than 12 percent since the start of May.

MSCI's emerging equity index slipped by 0.3 percent , with its biggest components -- Hong Kong, Taiwan and Korea -- down about 0.2 percent. Investors also sold local currency bonds, driving up yields across the board while sovereign dollar bond yield premiums over Treasuries widened 5 basis points to a three-week high of 301 basis points .

All this weighed on currencies. The South African rand and Turkish lira -- the countries most vulnerable to tighter global monetary conditions -- slipped by 0.6-0.8 percent against the dollar .

In eastern Europe, the Polish zloty and Czech crown pulled back from multi-year highs against the euro after Tuesday's robust economic data

The Polish central bank is expected to hold interest rates at 1.5 percent at its meeting later in the day.

Investors caution that the risk of a reversal of emerging markets strong run has risen, especially given currency valuations and bonds are less attractive. Investors polled by Morgan Stanley trimmed their overweight on the sector to 41 percent this month from 44 percent in April.

Chatellier noted, however, that Senegal had placed a $1.1 billion bond, with order books close to $8 billion.

"That clearly shows there is an interest in emerging markets," he added.

For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see) Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley Emrg Mkt Indx 1012.53 -2.52 -0.25 +17.43

Czech Rep 1026.13 -0.99 -0.10 +11.34

Poland 2337.51 -2.83 -0.12 +20.00

Hungary 34241.20 +162.73 +0.48 +6.99

Romania 8456.43 +1.69 +0.02 +19.36

Greece 790.84 +2.06 +0.26 +22.87

Russia 1105.80 -7.15 -0.64 -4.04

South Africa 47635.62 +208.66 +0.44 +8.50

Turkey 95809.38 -352.13 -0.37 +22.61

China 3104.74 -8.22 -0.26 +0.04

India 30649.14 +66.54 +0.22 +15.11

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2017

Czech Rep 26.45 26.35 -0.39 +2.09

Poland 4.19 4.17 -0.35 +5.13

Hungary 309.84 308.70 -0.37 -0.33

Romania 4.55 4.55 -0.13 -0.39

Serbia 123.11 123.04 -0.06 +0.19

Russia 56.75 56.60 -0.26 +7.96

Kazakhstan 313.37 312.18 -0.38 +6.47

Ukraine 26.41 26.42 +0.06 +2.25

South Africa 13.17 13.06 -0.83 +4.28

Kenya 103.25 103.30 +0.05 -0.85

Israel 3.60 3.59 -0.22 +6.88

Turkey 3.56 3.54 -0.64 -0.97

China 6.89 6.88 -0.10 +0.76

India 64.09 64.03 -0.09 +6.02

Brazil 3.10 3.10 -0.00 +5.07

Mexico 18.71 18.64 -0.39 +10.70

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 319 4 .01 7 83.34 1

All data taken from Reuters at 08:49 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.

Additional reporting by Claire Milhench; Editing by David Goodman

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below