NEW YORK, May 1 — Emerging market stocks and currencies slipped today in thin trading, with many regional markets closed for the Labour Day or May Day holiday, ahead of a Federal Reserve interest rate decision later in the day.
The MSCI indexes for emerging market currencies and stocks slipped 0.1 per cent each.
Traders were focused on the Fed, which is set to conclude its meeting today with a new statement and comments from Chair Jerome Powell that could give a clearer sense of how recent sticky inflation readings have changed expectations for rate cuts this year.
“The Fed must respond to three straight month jumps in inflation and probably take a step back in its plans to cut the interest rates this year,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The US central bank is expected to hold interest rates in 5.25 per cent-5.50 per cent range.
Emerging market currencies ended their second month lower in April as investors dialled back expectations for the timing and magnitude of US rate cuts this year and tensions between Israel and Iran sparked a rush to the safe-haven dollar.
In Brazil, the central bank chief said today that he did not want to commit to a specific terminal rate at the end of the current cycle of interest rate cuts.
Data showed Peruvian consumer price inflation fell 0.05 per cent in April, compared to 1.01 per cent advance in March.
Peru’s economy will likely expand by 3.1 per cent this year, the economy ministry said late today, up slightly from a previous forecast of 3.0 per cent growth.
Saudi Arabia’s real gross domestic product (GDP) decreased 1.8 per cent year-on-year in the first quarter, flash estimates showed, hurt by a decline in oil activities.
South Korea’s exports rose for a seventh month in April as strong demand for chips continued to lead growth while automobile sales and US shipments climbed to record highs.
Emerging markets such as China, Taiwan, Brazil, India, South Korea, Mexico, Turkey, Argentina, Poland, South Africa, Colombia, Chile, Czech Republic, Peru, Romania and Hungary were closed on Wednesday, impacting trading volumes. — Reuters
