Emerging Assets Fall for Fourth Day as Traders Weigh Trump Picks

(Bloomberg) -- Developing-nation currencies and stocks declined for a fourth day as investors looked past US consumer price data and focused on President-elect Donald Trump’s cabinet selections and potential policies.

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MSCI’s emerging-market stocks gauge slid 0.9%, setting it up for its worst week since June 2023, while a companion currencies index closed slightly lower after rising as much as 0.3% earlier in the session.

The market quickly moved on from Wednesday morning’s CPI data, which boosted bets that the Fed will cut interest rates by another quarter point next month, putting brief pressure on the dollar and US Treasury yields.

“The market wants to focus more on Trump’s cabinet appointments and the implications for carrying out policy,” said Thierry Wizman, director of global currencies and an interest-rate strategist at Macquarie Futures.

Trump’s cabinet picks include noted China hawks, raising the prospect of worsening ties between the world’s top two economies. Key posts going to Trump loyalists is stoking concerns that a push for higher tariffs, especially on China, will gain traction and accelerate inflation. Investors have also been disappointed by China’s piecemeal efforts to boost its economy.

The strength of the US dollar has weighed on emerging markets, with the MSCI gauges of stocks and currencies in the developing world falling to the lowest levels since September and August, respectively.

“Without a more meaningful fiscal stimulus from China, EM could remain a laggard, especially as trade and tariff uncertainty weigh on the region,” said Mislav Matejka, head of global equity strategy at JPMorgan Chase & Co.

The South African rand, Brazilian real and Colombian peso were among the worst performers in emerging markets Wednesday, while the Thai baht and Chilean peso gained. Colombia’s peso was dragged down by mounting fiscal risks and swings in oil prices.

China raised $2 billion from three- and five-year securities at one and three basis points over Treasuries, respectively. The orderbook for the sale was 20-times the bonds on offer.

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