Emerging market stocks dip, Israel's Shekel slides on Moody's downgrade

Emerging market stocks saw a slight dip on Monday amid subdued trading activity due to holidays in key markets such as China, Singapore and South Korea. The MSCI's index for EM stocks edged down by 0.1 per cent, marking its third consecutive session decline. Meanwhile, currency markets remained relatively flat.

Israel's shekel witnessed 0.4 per cent fall against US dollar following Moody's decision to downgrade the country's credit rating to "A2," citing significant political and fiscal risks stemming from recent conflicts with Hamas. Although the downgrade wasn't unexpected given the current security situation, the negative outlook raises concerns about potential further downgrades.

In Europe, Turkey's unemployment rate showed a slight improvement, dropping to 8.8 per cent in December. The Turkish lira remained stable against the dollar, while Turkish equities saw a 0.9 per cent rise, supported by gains in materials shares.

However, Hungary's forint slipped by 0.3 per cent against the Euro, and South Africa's rand saw a modest 0.1 per cent increase, breaking its three-session decline streak. In the Gulf region, Saudi Arabia's stock index rose by 0.2 per cent following Israel's announcement of ceasing strikes on southern Gaza.

The International Monetary Fund (IMF) highlighted that Middle East economies are falling below growth projections due to oil production cuts and ongoing conflicts like the Israel-Hamas dispute. Despite this, the global economic outlook remains resilient.

Pakistan's stock market dropped by as much as 2.8 per cent after national elections resulted in no single party securing a parliamentary majority. Additionally, Indian equities declined by 0.6 per cent, driven by losses in energy shares.

(With Reuters inputs)