Emerging market stocks, currencies at multi-month lows

New Delhi: Asset classes across emerging markets took a dive on Wednesday with stocks and currencies hitting multi-month lows pressured by an ongoing rout in global bond markets (30-year yields touching 5 per cent for the first time since 2007), said Deepak Jasani, Head of Retail Research at HDFC Securities.

US bond yields reach 16-year highs, challenging equity valuations and souring appetite for risk assets as investors bet interest rates will remain persistently high, he said.

In response to worries raised by an unexpected spike in the US job vacancies report, Indian markets fell by roughly 0.47 per cent, reaching a five-week low, said Vaibhav Vidwani, Research Analyst at Bonanza Portfolio.

The 10-year Treasury yield rose to 4.8 per cent, its highest level since August 2007, as a result of this contributing to worries that the Fed would hike rates again this year, he said.

Axis Bank, SBI, IndusInd Bank, NTPC, and UltraTech Cement were the Nifty's top losers, while Adani Enterprises, Nestle India, HUL, Eicher Motors, and HDFC Bank were among the top gainers.

Vinod Nair, Head of Research at Geojit Financial Services, said strong US job data is reinforcing Fed's hawkish stance and multi-year high US bond yields is signalling an impending interest rate hike.

Globally, investors are adopting risk-averse strategies due to inflation concerns and the strengthening US dollar. And in India, despite a robust economy, premium valuations of midcaps and recent rally is augmenting consolidation, he said.

Interest-rate-sensitive sectors like real estate, banking, and metals are the most impacted category, while the FMCG sector is more optimistic in expectation of near-normal monsoon and festival demand, he said.