Markets Sway Amidst Political Unrest and Economic Policy Shifts

Global markets experienced a downturn as investors focused on emerging political developments in Georgia and potential economic policies in the U.S. and China. Political uncertainties and upcoming rule changes in the U.S. tech investments dominated sentiments, impacting currencies and equities across developing markets.

On Tuesday, equities and currencies in developing markets wavered amid political developments in Georgia following contested election results. MSCI's index for emerging market equities dipped 0.1%, returning to levels not seen since September, while currency indices held near those of early August.

Investors showed caution, influenced by China's massive stimulus efforts and the closely contested U.S. election, where Donald Trump reportedly took a lead over Kamala Harris as per market predictions. Expected inflation under Trump's policies could deter investments in emerging markets.

Concurrently, the U.S. is finalizing new rules to restrict investments in Chinese technology sectors, effective January 2, part of a broader strategy to limit China's tech advancements. Market reactions were mixed with China equities dropping and other markets, like Thailand, seeing muted responses.

(With inputs from agencies.)