Stocks, FX muted as upbeat China data fails to impress
China stocks edge higher, yuan declines
China's factory activity grows in May - survey
Turkey's lira steadies from record lows
South African rand hits record low
By Siddarth S and Amruta Khandekar
June 1 (Reuters) -Emerging markets currencies and stocks were muted on Thursday as a surprisingly upbeat Chinese factory activity report failed to dispel investor concerns about the country's slow economic recovery, while the South African rand hit an all-time low.
MSCI's emerging market equities index .MSCIEF held near the unchanged mark at 0845 GMT, after hitting a two-month low on Wednesday, with stocks in mainland China .CSI300 up 0.2%.
A private sector survey showed China's factory activity unexpectedly swung to growth in May from a decline in April, driven by improved production and demand.
China's yuan CNY=CFXS initially strengthened against the dollar but later gave up the gains, falling 0.1% and extending declines to the fourth straight session.
The latest data is in contrast to a slew of recent readings, including one on Wednesday showing a faster-than-expected deterioration in manufacturing activity, that have underscored a weak post-pandemic recovery in the world's second-largest economy.
"One set of better-than-expected Chinese data is unlikely to significantly improve market sentiment following plenty of indication that the economy is not performing as well as investors were hoping for after the COVID restrictions were eased," said Piotr Matys, senior FX analyst, In Touch Capital Markets.
The dollar =USD held strong despite some U.S. Federal Reserve policymakers pointing towards a rate hike "skip" in June and the passing of the U.S. debt ceiling bill in the House of Representatives.
"At this stage of the monetary policy cycle, it's far more important when the Fed may start cutting interest rather than when it may stop raising them. The message remains relatively clear from Fed's officials: the markets are expecting us to start cutting rates way too early," said Matys.
The broader EM currencies index .MIEM00000CUS was also muted.
South Africa's rand ZAR= fell as low as 19.9075 against the U.S. dollar, worse than the previous record low of 19.8600, due to a worsening power crisis and geopolitical tensions.
Turkey's lira TRYTOM=D3 steadied marginally after briefly dropping to a record low of 22.95 against the dollar overnight.
Former economy chief Mehmet Simsek was almost certain to be appointed to newly re-elected President Tayyip Erdogan's new cabinet, according to sources.
Also, Turkish factory activity expanded further in May, a survey showed.
Central and eastern European currencies were mixed, with the Hungarian forint EURHUF= flat against the euro, while the Polish zloty EURPLN= fell 0.1%.
Poland's manufacturing sector shrank further in May but at a shallower pace, a survey showed.
Sri Lankan shares rose after the country's central bank cut key interest rates by 250 basis points on easing inflation.
For GRAPHIC on emerging market FX performance in 2023, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2023, see https://tmsnrt.rs/2OusNdX
For TOP NEWS across emerging markets nTOPEMRG
For CENTRAL EUROPE market report, see CEE/
For TURKISH market report, see .IS
For RUSSIAN market report, see RU/RUB
Reporting by Siddarth S in Bengaluru; Editing by Rashmi Aich
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
