Emerging-Market Assets Drop a Second Day Amid Commodity Weakness

Emerging-market currencies and stocks fell for a second day as a drop in the oil price and more hawkishness from Federal Reserve officials damped a rally in developing-nation assets.

The ringgit led losses as Brent crude dropped by the most in a month overnight, worsening the outlook for net oil exporter Malaysia. South Korea’s won weakened for a second day and Indonesia’s rupiah was poised for its biggest decline in more than a week after a Bloomberg gauge of raw-material prices fell the most since early January. Emerging-market stocks headed for their first weekly loss in a month, led by energy shares.

A gauge of the greenback against 10 peers rose for a fifth day after Federal Reserve Bank of St. Louis President James Bullard joined his counterparts in San Francisco and Atlanta in floating the prospect of a U.S. interest-rate hike as soon as April should the economic data warrant it. A sustained reversal in the trajectory of oil and commodity prices that have been rising since late January would Cloud an improving export outlook for many developing nations.

“Overnight the U.S. dollar was strong, we had a pullback in oil and a pullback in Equities ,” said Eddie Cheung, a currency strategist at Standard Chartered Plc in Hong Kong. “After Yellen was quite dovish, there’s been a few Fed members that came out and said an April or June rate hike is still possible, so the market’s been swinging around on that,” he said, referring to the Fed chair.

To contact the reporter on this story: Justina Lee in Taipei at jlee1489@bloomberg.net. To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net, Andrew Janes, Simon Harvey

By: Justina Lee

©2016 Bloomberg News