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Stocks and currencies rise; PMIs a mixed bag

08/02/2021 | 04:50am EDT

Aug 2 (Reuters) - Emerging market stocks rose on Monday after a bruising month, led by gains in China, while currencies were mixed after manufacturing PMIs against a softer dollar.

The Chinese yuan was contained by data that showed factory activity grew at slowest pace since February 2020, while rising virus cases also weighed.

Elsewhere in Asia PMIs indicate a healthy rebound but slowing orders and rising price pressures.

Turkey's PMI, meanwhile, showed factory activity rose at the fastest pace in six months. The lira rose 0.7%, inching closer to seven-week highs. The focus will be on inflation data from Turkey on Tuesday which is expected to come in closer to the country's key interest rate.

"Investors started the week in the inevitable buy-the-dip mode," said Jeffrey Halley, senior market analyst at Oanda.

"Sentiment may also have been helped by the unveiling of the bi-partisan U.S. infrastructure bill."

U.S. senators on Sunday introduced a sweeping $1 trillion plan to invest in roads, bridges, ports, high-speed internet and other infrastructure.

As the dollar languished ahead of U.S. jobless claims and payrolls data later this week, Russia's rouble extended gains to a sixth straight session against the dollar, looking past a second month of contraction in manufacturing activity and falling oil prices.

Currencies of Poland and Hungary made healthy gains against a stronger euro as manufacturing remained in the expansion territory.

South Africa's rand shrugged off early losses to rise 0.3%, while stocks were just 1% shy of five-month highs. The stock index increased 1.5% last week, despite offshore investors being net sellers of South African stocks in the week.

MSCI's index of EM stocks rose 1% after dropping 2.6% in the previous week on regulatory concerns in China.

China's securities regulator said on Sunday it will seek closer cooperation with its U.S. counterpart and will support overseas listings, after U.S. regulators tightened disclosure for Chinese companies and voiced concern about Beijing's regulatory actions.

Mainland China and Hong Kong <,HSI> stocks rallied between 1% and 2.6%, while those in Turkey, Russia and Poland all rose between 0.3% and 0.7%.

But concerns over rising coroanvirus cases across many parts of Asia and Latin America capped gains.

"The virus remains the biggest threat to the outlook," said Neil Shearing, group chief economist at Capital Economics. "The rapid spread of the Delta variant... poses a bigger threat to those emerging economies – particularly in Africa and Latin America – where vaccination rates are lower."

For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru; Editing by Mike Harrison)

© Reuters 2021
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