Tariffs and Tremors: Emerging Markets Face Volatile Times

Emerging market stocks and currencies softened as U.S. tariffs stirred risk aversion. Despite U.S. inflation concerns, some markets, like Eastern Europe, anticipated gains from potential European fiscal expansion. In Asia, a strong earthquake in Myanmar disrupted trading, while U.S. tariff announcements loomed, potentially influencing Federal Reserve interest rate decisions.

Emerging market stocks and currencies experienced a downturn on Friday due to the ripple effects of U.S. President Donald Trump's latest tariffs. The tariffs have created a climate of risk aversion, leading investors to focus on upcoming U.S. inflation data for insights into the Federal Reserve's future interest rate actions.

While the MSCI index for emerging market stocks fell by 0.6%, the month still promises to end positively for these stocks due to optimism about Chinese and Indian markets and a softer U.S. dollar. Eastern European equities, despite a daily decline, are expected to see a significant monthly rise, driven by European fiscal spending and hopes for peace between Russia and Ukraine.

In Asia, emerging markets faced additional challenges as the Stock Exchange of Thailand halted trading following an earthquake in Myanmar. The automotive sectors also felt the impact of tariffs, with Hyundai and Kia shares dropping following Trump's announcement of new duties on imported vehicles. The market now keenly awaits the U.S.'s reciprocal tariff policies set to be disclosed in early April.

(With inputs from agencies.)