LONDON Aug 1 (Reuters) – Emerging equities traded near flat
on Wednesday after four days of gains as caution crept in ahead
of monetary policy meetings in the United States and Europe,
while Chinese markets shrugged off weak factory data to rise 1
percent.
Despite weak data most analysts still only expect the
Federal Reserve to signal its readiness to act in future at the
conclusion of its two-day meeting later today, while divisions
among European leaders could stall any action from the European
Central Bank on Thursday.
“The market is focusing on the Fed and more importantly the
ECB. We have seen in the past couple of days that the market has
become more cautious after rallying very strongly last week”
said Murat Toprak, emerging markets strategist at HSBC.
Benchmark emerging stocks rose 0.12 percent.
Leading the gains in the index were Chinese stocks,
which gained 0.9 percent during the session. The index recently
hit three-year lows.
This comes after factory purchasing managers’ surveys showed
Chinese manufacturing is only just expanding. Still, while the
official PMI index hit 8-month lows, the small dip from June to
July meant the sector avoided contraction.
“The PMIs this morning were not really surprising as they
signalled that we are not having a hard landing but definitely a
deceleration (in growth). Markets can be happy that it’s not
worse,” said Toprak.
In emerging Europe, Polish and Czech PMIs were better than
expected, though they remained in contraction territory. The
zloty rose 0.2 percent versus the euro.
On currencies, the Hungarian forint gained 0.5 percent
after having risen 1.5 percent in July when Budapest’s
negotiations with the International Monetary Fund appeared to go
relatively smoothly.
“The forint has already rallied substantially on the news on
the IMF front. The IMF has been more constructive than people
expected, and the government showed it was ready to make some
adjustments,” said Toprak.
The Russian rouble slipped 0.4 percent versus the
dollar as oil prices eased.
(Reporting by Alistair Smout; Additional reporting by Sujata
Rao; Editing by Hugh Lawson)
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