Stocks, currencies look to Powell after hawkish remarks rattled markets

* EM shares index extends losses to day 6, EM FX at
one-month low

* Fed Chair Powell’s testimony to Congress on deck

* Belarusian bonds, FX stabilize after slide

* Hungarian central bank decision due later

June 22 (Reuters) – Emerging market assets rose briefly but
then extended losses for a sixth day in a row on Tuesday as
investors looked to more monetary policy hints from the United
States, while Belarusian government bonds and the currency
stabilized after steep losses.

MSCI’s index of EM shares inched lower after a
bruising five days when it lost over 2%, while a currency
equivalent stayed at one-month lows.

U.S. Fed Chair Jerome Powell’s testimony to Congress on
Tuesday will be a focus for markets after his prepared comments
said the U.S. economy continues to show “sustained improvement”,
but that inflation was a concern.

Analysts at Maybank said that markets would welcome some
reassurance from the Fed that a tightening cycle will not start
sooner than planned, as suggested by some Fed members.

The Belarusian rouble was mostly flat while
yields on dollar bonds came
off highs hit on Monday when the West imposed new sanctions on
Belarus over the forced landing of a passenger flight to detain
a dissident journalist.

Russian ties with some world powers also came under
pressure after the European Union included Russian businessman
Mikhail Gutseriyev, the largest single foreign investor in
Belarus, in its sanctions.

Separately, the Kremlin on Monday said it did not expect the
United States to stop trying to “contain” Russia amid talk of
new U.S. sanctions on Moscow over the alleged poisoning if a
Kremlin critic.

The Russian rouble made lazy gains against a stronger
dollar, staying just over 2% off this year’s highs.

The South African rand fell 0.2% after a 1% rally
last session when it was one of the rare gainers against the
dollar, while the lira pulled up xx% from all-time lows
hit on Monday.

Hungary’s forint edged lower against the euro with
all eyes on a central bank meeting later in the day. A 25 basis
point hike is expected, making it the first European Union
central bank to tighten policy since the coronavirus pandemic.

For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX

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For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see
(Reporting by Susan Mathew in Bengaluru; Editing by Raissa
Kasolowsky)