June 22, 2020 / 9:20 AM / 20 days ago

EMERGING MARKETS-Stocks fall as second virus wave fears build

* WHO reports record daily rise in COVID-19 cases

* S.African weakens, emergency budget awaited

* Turkish stocks jump with Halkbank leading gains

By Shreyashi Sanyal

June 22 (Reuters) - Emerging market stocks started the week on softer footing on Monday after the World Health Organization reported a record global increase in COVID-19 cases, while South Africa’s rand weakened ahead of a local emergency budget later this week.

Fears of a second wave of coronavirus infections pushed the MSCI’s index of emerging market stocks 0.1% lower. The index had risen 1.5% in the previous week.

Most eastern and central European indexes led declines, with Romanian stocks falling 1% as Germany’s coronavirus reproduction rate jumped to 2.88, a rate showing infections are rising above the level needed to contain the disease over the longer term.

New U.S. cases on Saturday hit the highest since early May, while the WHO reported on Sunday total cases rose by 183,020 in a 24-hour period. Fears of a second wave has also spurred safe-haven demand for gold on Monday.

The South African rand edged lower against the dollar ahead of the country’s revised budget later this week, which comes almost three months after government announced a 500 billion rand ($28.78 billion) stimulus package leaning heavily on new borrowing.

The Russian rouble firmed marginally as relatively strong oil prices supported the currency, while stocks fell 0.7%. Russia’s central bank slashed interest rates to the lowest level since the collapse of the Soviet Union on Friday.

“The FX market has a similar lean today as the one exhibited last week where traders stayed for the most part in a cautionary ‘wait and see mode’ as the virus case counts sprung higher stateside,” said Stephen Innes, chief global market strategist at AxiCorp.

Investors have been optimistic of a post-coronavirus economic recovery fuelled by actions taken by major central banks. But emerging market stocks have stuck to a holding pattern for nearly two months now after rallying sharply in April from March-lows.

Turkish stocks jumped 1.4%, with financials leading the charge as state lender Halkbank surged 7% after U.S. federal chief prosecutor Geoffrey Berman, who oversaw a court case against the bank, stepped down over the weekend.

The Turkish lira dipped. Data showed Turkey’s consumer confidence index edged up in June from the previous month, still remaining deep in pessimistic territory.

For GRAPHIC on emerging market FX performance in 2020, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2020, see tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Amy Caren Daniel)

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