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U.S. inflation data eyed
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Hungary inflation eases for second straight month
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Hong Kong shares fall as geopolitical tensions rise
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EM stocks down 0.3%, FX flat
By Shashwat Chauhan April 12 (Reuters) - Emerging market stocks fell on Wednesday, bogged down by losses in Hong Kong shares as geopolitical tensions dented risk sentiment, while currencies struggled for direction ahead of U.S. inflation data due later in the day. The MSCI's EM stocks index fell 0.3%, driven lower by a more than 1% drop in Hong Kong shares at the close, as elevated tensions between China and Taiwan hit risk appetite. China said that President Tsai Ing-wen was pushing Taiwan into "stormy seas" after Beijing held military exercises in response to Tsai's recent meeting with U.S. House Speaker Kevin McCarthy in California. Warren Buffett called geopolitical tensions "a consideration" in Berkshire Hathaway Inc's decision to sell most of its stake in TSMC just a few months after buying it, Nikkei reported on Tuesday. Shares of the Taiwanese chipmaker slipped 0.8%. The MSCI's index for emerging market currencies was flat ahead of a reading of U.S. inflation data due later in the day, a crucial metric in gauging where the Federal Reserve stands on monetary policy tightening. "EM is not really in the driver's seat here because it's just all about the U.S. and how far the Fed goes and when it starts cutting (interest rates)," said Marek Drimal, lead CEEMEA strategist at Societe Generale in London.
Hungary's Budapest SE index fell 0.5% after data showed Hungary's headline inflation eased for a second straight month in March, but stubbornly held above 25% and near more than two-decade highs, signalling elevated interest rates may stay higher for longer to help push price growth down. Hungary's forint was subdued against the euro, while other Central and Eastern European currencies edged higher. Data showed the Czech unemployment rate fell to 3.7% of the workforce in March, below a Reuters poll forecast of 3.8%. The Czech crown inched 0.1% up against the euro. The Russian rouble weakened to 82.08 against the dollar, hurt by the combination of falling exports and recovering imports, while failing to benefit from higher oil prices amid reduced foreign currency supply among exporting firms. Investors would be looking out for Russia consumer price index (CPI) data later in the day. Russia's Central Bank Governor Elvira Nabiullina said low inflation would help stabilise the rouble and spoke against seeking to manage the Russian currency's exchange rate. Later in the day, investors would be looking out for retail sales data out of Brazil. (Reporting by Shashwat Chauhan in Bengaluru; Editing by Emelia Sithole-Matarise)
