Emerging-market stocks and currencies faced a downturn on Monday as fresh US factory data caused traders to reassess their bets on interest rate cuts. The unexpected expansion in US factory activity in March led to a decrease in risk appetite, with the odds of a rate cut in June dipping below 50%. This news impacted various currencies, with the Brazilian real and Hungarian forint leading the declines among developing nations.
Mexico’s peso also experienced fluctuations, dropping as much as 0.7% after the US data was released. Analysts are keeping a close eye on Mexico’s central bank, which is set to release minutes from its latest meeting where rates were cut for the first time since 2021. The outcome of this meeting could further impact the peso.
On a positive note, Turkey’s lira surged against the dollar despite President Recep Tayyip Erdogan’s party facing a defeat in local elections. Erdogan’s endorsement of the current economic program following the elections has led to optimism among investors, with Deutsche Bank expressing a constructive outlook on Turkish assets.
In Asia, China’s factory activity exceeded expectations in March, boosting optimism about the world’s second-largest economy. This positive data also contributed to a rise in gold prices to a fresh record earlier in the session. Overall, the global market remains volatile as traders navigate through changing economic indicators and political developments.
