Emerging-Market Assets Dip as Chip Rout, Fed Rate Worries Linger

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Emerging-market assets fell on Friday as a rout in chipmakers weighed on equities and lingering concerns over the Federal Reserve’s rate path kept currencies under pressure.

(Bloomberg) -- Emerging-market assets fell on Friday as a rout in chipmakers weighed on equities and lingering concerns over the Federal Reserve’s rate path kept currencies under pressure.

An index for emerging-market currencies fell less than 0.1% after an end-of-day adjustment, and most currencies weakened against the dollar. A companion index for stocks fell 0.3%.

US producer prices climbed in October from a year earlier at the fastest pace since 2022, but the data came slightly below estimates, capping a week dominated by surging bets on Federal Reserve rate hikes, as well as Jensen Huang’s ouster from Nvidia Corp. Earlier this week, hotter-than-expected inflation data and rising energy costs had strengthened the case for tighter Fed policy.

“The PPI number took some pressure off the Fed to hike by 50 basis points, but EM investors are still nervous about the final destination for the Fed, as we are looking at higher rates for longer,” said Paresh Upadhyaya, a strategist at Pioneer Investments.

MSCI’s gauge for emerging-market stocks fell on Friday, but was still up more than 3% this week, with South Korea and Taiwan’s AI-dominated stock gauges gaining.

While the leadership crisis at Nvidia cast a pall over stocks, investors have also piled into Anthropic PBC’s initial public offering in a sign of confidence in the AI industry. Shares of chipmakers Samsung Electronics and SK Hynix climbed this week on expectations that demand will continue to be strong.

“The firm, underlying demand for chips continues to be a main pillar for emerging markets in Asia, especially the semiconductor exporting powerhouses of Taiwan and South Korea,” said Homin Lee, senior macro strategist at Lombard Odier in Singapore.

Fears of weaker chip demand have proved short-lived as investors expect the broader AI ecosystem to absorb any excess capacity, he said.

Also in equities, Indonesian stocks posted their best week since mid-June as foreign investors returned to the market after months of…

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