Stocks slide on rising bets of aggressive U.S. rate hikes

Emerging market stocks fell on Tuesday as the chances of more interest-rate hikes by the U.S. central bank gained ground following a strong services sector data.

Mainland China stocks 000001, 399300 were among the rare outperformers as sources said the country's government is set to announce a further easing of some of the world's toughest COVID-19 curbs as early as Wednesday.

Most other bourses across the emerging markets fell, with emerging Europe taking cues from a weak open in Western Europe.

MSCI's index of emerging market shares EFS slipped 1.4%, losing more than what it gained on Monday.

"Unexpectedly strong U.S. data revived expectations of the Fed raising rates more than expected," said Lukman Otunuga, senior research analyst at FXTM.

Economic data on Monday showed U.S. services industry activity unexpectedly picked up in November and employment rebounded in a sign of underlying momentum in the economy.

Among currencies, Asian units slumped as the dollar strengthened following the data.

Other EM currencies fared better with South Africa's rand USDZAR extending gains to a third straight session, up 0.5%, bolstered also by data that showed South Africa's 1.6% in the third quarter compared to a contraction of 0.7% in the second.

Russia's rouble (RUBUTSTN=MCX) extended declines to hit eight-week lows and was last trading at around 62.8 per dollar after the imposition of a price cap on Russian oil.

The price cap is likely to lead to a small loss in the volume of Russian exports, Renaissance Capital analysts said.

"We maintain our forecast for a gradual weakening of the rouble to 65 per dollar in the coming months with a move into the 70-75 range in 2023 against the backdrop of lower export revenues and a recovery in imports," RenCap said.

Thomson Reuters

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