LONDON, Aug 14 (Reuters) - Emerging market stocks rebounded from one-month lows on Monday tracking gains in developed markets, with Asian markets shrugging off weaker-than-expected Chinese data and currencies assisted by the dollar staying just off one-week lows.
MSCI’s benchmark emerging equity index rose 0.8 percent after plunging over 2 percent last week when tensions between North Korea and the United States escalated over the former’s threat to fire missiles near the U.S. Pacific territory of Guam.
At the weekend China’s President Xi Jinping in a telephone call with U.S. President Donald Trump urged all sides to avoid words or action that raised tensions.
Asian stocks and currencies rallied after selling off hard last week, with South Korea stocks up 0.6 percent, Chinese mainland shares up 1.3 percent and Hong Kong stocks up 1.4 percent.
The South Korean won also rebounded 0.2 percent from a one-month low and China’s yuan firmed against the dollar after the central bank fixed the midpoint at its strongest in nearly 11 months.
The moves came despite slower than expected growth in Chinese industrial output, investment, retail sales and trade in July. Some market participants expect the authorities to step in to head off any hard landing ahead of the autumn Communist Party leadership reshuffle.
“The key thing is that this is just a softening of the economy – it’s not a very sharp slowdown,” said William Jackson, senior emerging markets economist at Capital Economics. “It’s just a weakening from what was a very marked turnaround at the end of last year and the start of this year.”
U.S. President Donald Trump is expected later on Monday to turn up pressure on Beijing and order an investigation into some of its trade practices, though that does not necessarily signal concrete action anytime soon.
Emerging European markets also rose, with Turkish stocks up 1.2 percent, Czech stocks up 0.8 percent, Hungary shares up 0.5 percent and Moscow shares up 0.4 percent.
Currencies were also firmer against the dollar, which fell to one-week lows on Friday after lukewarm U.S. consumer price inflation data. U.S. Treasury yields were also hit.
The South African rand, one of the currencies most sensitive to U.S. inflation and interest rates, firmed 0.6 percent.
The rand may also have been helped by Moody’s decision to delay ratings decision that was scheduled for last Friday.
“The South African economic cycle seems to be turning so they may be waiting for more evidence before making a judgement. It fell into a technical recession in the first quarter, but a lot of the data suggests Q2 was a lot better,” Jackson said.
The Turkish lira and the Mexican peso firmed 0.2 percent. On Friday Fitch said the risk of a disruptive outcome for Mexico from NAFTA renegotiations had fallen recently, with talks set to begin this week.
Kenya’s sovereign dollar-denominated eurobonds were a touch firmer after incumbent President Uhuru Kenyatta was declared the winner in what international observers said was a largely fair election.
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Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg
Morgan Stanley Emrg Mkt Indx 1050.94 +8.14 +0.78 +21.88
Czech Rep 1030.36 +9.30 +0.91 +11.80
Poland 2380.95 +9.23 +0.39 +22.23
Hungary 37011.34 +199.10 +0.54 +15.65
Romania 8324.16 +6.85 +0.08 +17.49
Greece 827.56 +4.01 +0.49 +28.57
Russia 1028.94 +6.53 +0.64 -10.71
South Africa 49150.93 +384.22 +0.79 +11.96
Turkey 08202.93 +1239.83 +1.16 +38.48
China 3236.93 +28.39 +0.88 +4.29
India 31466.09 +252.50 +0.81 +18.18
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 26.15 26.15 -0.02 +3.27
Poland 4.28 4.28 +0.10 +2.89
Hungary 304.06 304.10 +0.01 +1.57
Romania 4.57 4.57 +0.06 -0.73
Serbia 119.42 119.46 +0.03 +3.29
Russia 59.83 59.82 -0.03 +2.40
Kazakhstan 332.59 332.76 +0.05 +0.32
Ukraine 25.62 25.66 +0.18 +5.41
South Africa 13.35 13.43 +0.57 +2.83
Kenya 103.70 103.75 +0.05 -1.28
Israel 3.58 3.58 +0.16 +7.61
Turkey 3.53 3.54 +0.15 -0.10
China 6.67 6.66 -0.10 +4.12
India 64.06 64.14 +0.12 +6.07
Brazil 3.19 3.19 +0.03 +1.90
Mexico 17.79 17.82 +0.16 +16.41
Debt Index Strip Spd Chg %Rtn Index
Sov’gn Debt EMBIG 329 -3 .06 7 92.17 1
Reporting by Claire Milhench; Editing by Angus MacSwan
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