Emerging Markets: Weekly Dive Amid Global Uncertainties

Emerging markets faced challenges this week, as stocks and currencies inched up amidst global uncertainties, including weak Chinese data and mixed political news from Sri Lanka. The U.S. dollar's strength added pressure on currencies. Analysts warn of potential impacts from a possible Donald Trump presidency on developing economies.

Emerging markets saw a twitch of improvement on Friday but remained poised for a weekly decline, bearing the brunt of global economic uncertainties. Investors assessed weak economic data from China while observing Sri Lankan bonds rise following electoral victories.

Emerging market stocks were set for their most significant weekly fall since June 2022, with the MSCI index edging up slightly. The currencies index also experienced pressure from the robust U.S. dollar, with emerging market currencies preparing for their steepest weekly decline this year. Analysts pointed to potential impacts from a second Donald Trump presidency as a contributing factor to market jitters.

In Asia, China's yuan was on its longest losing streak since 2021, reflecting concerns over its floundering economy. Concurrently, Sri Lanka's political landscape brought optimism, bolstering Sri Lankan bonds due to President Anura Kumara Dissanayake's coalition victory. Investor sentiment remained wary as developments in South Africa and Nigeria unfolded.

(With inputs from agencies.)