(There will be no London-based emerging markets report on
Friday April 18 or Monday April 21 due to public holidays in the
By Sujata Rao
LONDON, April 17 Russian stocks pared gains on
Tuesday after President Vladimir Putin accused the authorities
in Kiev of plunging Ukraine into an "abyss".
But the rouble edged up for the second straight day on
Thursday along with broader emerging assets as U.S. Fed chair
Janet Yellen's comments on monetary policy overshadowed
escalating tensions in eastern Ukraine.
Yellen affirmed that the Fed would deliver stimulus for some
time to come, noting risks from persistently low inflation
. That provided an across-the-board boost to
emerging assets which have suffered from the prospect of higher
U.S. interest rates and Treasury yields.
U.S. 10-year Treasury yields, the benchmark underlying
instrument for emerging assets, are near 2.6 percent
after hitting two-month highs above 2.8 percent earlier in April
while the dollar fell against other major currencies.
That lifted Russian equity markets by more than half a
percent while the rouble firmed 0.3 percent to the dollar
despite U.S. President Barack Obama's threat of fresh
economic sanctions against Moscow for its role in Ukraine.
In a televised call-in with the nation, Putin said Ukraine's
presidential election campaign was being conducted in an
"absolutely unacceptable way", accused Ukraine's leaders of
committing a "grave crime" by using the army to quell unrest in
the east of the country, and did not rule out sending in Russian
But Manik Narain, strategist at UBS, noted that Yellen's
dovish stance had even helped emerging markets shrug off a 6
percent slump in Google shares in after-hours trade
after the company's earnings disappointed investors late on
"The Yellen comments are providing a buffer to emerging
markets. The 10-year part of the curve is trading very well and
that's a big deal for EM so there's been some strengthening at
the margins," Narain added.
The broader emerging equity index rose 0.2
percent, up for the second day in a row, though it is around 2
percent off five-month highs hit earlier this month.
Some of the gains are being dampened by the tensions in
Ukraine where armed pro-Russian separatists have seized swathes
of territory. Kiev said three separatists were killed in an
attack on the Ukrainian national guard overnight
Ukrainian, Russian and Western diplomats arrived for talks
in Switzerland but a solution is seen as unlikely.
But the tensions had no impact on the hryvnia which has been
appreciating ever since an emergency 300 basis-point rate rise
on Monday. It hit a fresh two-week high against the dollar
and has jumped more than 10 percent this week.
Ukrainian dollar bonds also rose off one-month lows,
receiving a boost from news that Templeton bond fund manager
Michael Hasenstab had maintained his exposure to the country.
Commerzbank however warned the trade faced headwinds and
recommended "remaining sidelined".
"If all sides fail to reach some sort of an agreement today,
we will enter the Easter celebrations with a very challenging
backdrop, as the United States and the EU have vowed economic
sanctions and general rhetoric has clearly become that much more
confrontational," it added.
For GRAPHIC on emerging market FX performance 2014, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2014, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2014, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2014, see link.reuters.com/zyh97s
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )
(Editing by Ruth Pitchford)