Emerging-market equities and currencies saw a rebound on Monday, breaking a three-day streak of declines. The shift in market sentiment came as indications suggested that President Donald Trump’s upcoming tariffs may be more focused and less aggressive than previously feared, sparking renewed investor confidence across the region. The MSCI emerging-market equity index climbed by 0.5%, buoyed by the performance of technology giants listed in Hong Kong.

Positive Market Reactions

In the world of developing currencies, trading was mixed but slightly improved overall, with gains of less than 0.1%. Notably, the Mexican peso emerged as the standout performer, reflecting a decrease in tariff anxieties from the United States. The anticipation surrounding Trump’s tariff announcement, scheduled for April 2, has created a more optimistic atmosphere, offering relief to investors who have been worried about a potential tariff escalation.

• Key highlights:
  • MSCI index rose by 0.5%
  • Mexican peso leads currency gains
  • Tariff announcement on April 2 is crucial

Easing Tariff Worries

Alejandro Cuadrado, chief strategist at BBVA, commented on the positive trend, saying, “This week started off well, marked by constructive news rather than alarming headlines.” He emphasized that April 2 would be a significant date for market watchers.

In Mexico, recent economic indicators revealed that inflation has decelerated more than analysts had predicted during the first half of March. This development comes just before a central bank meeting where officials may consider implementing their sixth consecutive rate cut. According to Alberto Ramos, chief economist for Latin America at Goldman Sachs, the latest inflation data supports the likelihood of a 50 basis point cut in the upcoming meeting on March 27.

Regional Currency Movements

In Eastern Europe, the Polish zloty stood out as the top performer, appreciating by 0.3% against the dollar. Traders are closely watching the ongoing situation in Ukraine, looking for updates on potential ceasefire negotiations.

Conversely, the Turkish lira faced significant pressure following the detention of President Recep Tayyip Erdogan’s main political rival, which triggered a wave of protests and a selloff in the capital.

Bond Market Concerns

In the bond market, Indonesian dollar notes struggled, reflecting worries regarding the impact of governmental economic strategies on both growth and fiscal health. However, the stock market in Indonesia managed to recover some losses after the announcement that two former presidents will join the advisory board of the new sovereign wealth fund, alleviating some concerns about its leadership.

As emerging markets react to these developments, investors remain vigilant, ready to adapt to the shifting economic landscape.