Emerging market stocks fell for a third day yesterday, leading shares lower in Asia and Europe, and bonds declined. Metals retreated while grains rose.
The MSCI emerging markets index slipped 1.3 percent, the most in six weeks, by 7.26am in New York, as India’s rupee dropped to a record low against the dollar and Indonesia’s rupiah weakened to the lowest level since June 2009.
The Stoxx Europe 600 index declined 0.5 percent. The 10-year treasury yield jumped as much as 5 basis points to 2.87 percent, the highest since July 2011. Italy led European government bonds lower. Maize advanced 1.8 percent and copper slid 1 percent.
Slowing economic growth in countries from India to Indonesia is driving investors to pull funds from emerging markets, spurred by speculation the US Federal Reserve will taper its stimulus programme known as quantitative easing.
“There is a bad mood coming from America, tapering is coming,” Robert Halver, the head of capital markets research at Baader Bank in Frankfurt, said. “It’s a new world, terra incognita, for what tapering could mean for the market as we have no historical benchmark.”
Officials will probably begin to scale back their $85 billion (R863bn) in monthly asset purchases next month, 65 percent of economists say. – Bloomberg