LONDON, July 18 (Reuters) – Global emerging market stocks
dipped on Wednesday as Federal Reserve Chairman Ben Bernanke
kept his cards close to his chest on the prospects of further
U.S. monetary stimulus, though Europe’s emerging shares saw
gains on a stronger euro.
Meanwhile, the Israeli shekel hit three-year lows on rate
cut expectations.
Bernanke offered a gloomy view on Tuesday of the U.S.
economy’s prospects but provided few clues on whether the Fed
was moving closer to a third round of asset buying.
“The Fed chairman is going to sound dovish, but we know he
is dovish. The problem is he is not sending strong policy
signals that QE3 is on the way, he’s just leaving the door open
to more easing,” said Benoit Anne, head of emerging markets
strategy at Societe Generale.
Benchmark emerging market stocks fell by 0.4
percent, led by losses in Southeast Asia, but emerging European
market stocks were up by 0.4 percent as the euro
rallied against the dollar.
In Israel, the shekel fell to its lowest point since
July 2009, as it weakened beyond 4 shekels to the dollar on rate
cut expectations.
This followed the departure from the government’s coalition
of centrist party Kadima, following a dispute over military
conscription.
“The shekel is trading like a G10 currency, which means we
will see lower rates and a weaker currency in this environment,”
Anne said.
“The central bank’s policy easing room has been widened by
the soft inflation print, so there is more expectation of rate
cuts, and that is denting the currency.”
Continued…
