Emerging stocks fall as traders eye China’s economy, US data

(Bloomberg) — Emerging stock markets fell on fresh signs of an economic crisis in China. Currencies were mixed ahead of US jobs data later in the week, which could shed more light on the pace of interest rate cuts.

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MSCI’s index of emerging-market shares fell 0.3 percent on Monday, with losses in Chinese blue-chips such as Alibaba Group Holding Ltd. and Tencent Holdings Ltd. outpacing a rally in Taiwan Semiconductor Manufacturing Company Ltd. shares.

The slide followed data showing Chinese factory activity contracted for a fourth straight month in August, the latest signal that the world’s second-largest economy may struggle to meet this year’s growth target.

In currency markets, the focus is turning to the countdown to US monetary easing, with more data set to shape expectations about the scale of rate cuts, the impact on the dollar and sentiment towards riskier assets.

“U.S. economic growth remains robust, driven by strong consumption, even as disinflation continues slowly but surely,” Win Thin, global head of markets strategy at Brown Brothers Harriman in New York, said in an emailed note. – email. “We’re in a bullish moment right now, and so we continue to believe that the Fed will start cutting rates this month in a very gradual manner.”

MSCI’s emerging FX index, which tracks the currency’s total returns, including interest income, fell 0.1 percent on Monday. The Thai baht and Malaysian ringgit led the losses among peers, weakening 1.1% and 0.9% respectively. The South African rand weakened for a second day, slipping from a 13-month high last week.

The Mexican peso held slightly stronger in overseas trading. Domestic risks related to judicial reform will continue to weigh on the currency, according to ING Bank NV strategist Francesco Pesole.

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