FX stable, stocks jump as markets assess US tariff developments, await inflation

Most emerging market currencies held their ground on Tuesday as investors awaited U.S. inflation data, while stocks recovered amid optimism surrounding countries' trade negotiations to meet U.S. President Donald Trump's August 1 tariff deadline.

Trump signalled openness to tariff talks, following his threats to various trading partners. Mexico was the latest, hit by a 17% tariff on tomato exports.

Countries are ramping up negotiations ahead of the revised August 1 deadline, led markets to hope that softer tariffs would come into place, lifting some sentiment.

MSCI'S global EM stocks gauge CBOE:EFS jumped 1%, trading around levels last seen in February 2022, after two sessions of declines.

Regional bourses in Poland GPW and Romania BET gained 0.7% and 0.5%, respectively.

Heavyweight Asian stocks added to gains. Those in Indonesia COMPOSITE and Hong Kong HSI climbed 0.6% and 1.6%, respectively.

"Trump can reliably be counted on to change his mind... markets are clearly exhibiting tariff fatigue, and recent announcements are evidencing themselves as a form of pressure rather than a likely outcome," said Rabobank analysts.

Meanwhile, Trump also pressured Russia on Monday, by issuing a 50-day ultimatum to end the war in Ukraine or face energy sanctions, later downplayed by a senior Russian security official.

Russia's rouble USDRUB_SPT dipped 0.2% against the dollar, over-the-counter market data showed. International bonds in Ukraine edged slightly lower, after some touched a near five-week high in the previous session.

MSCI global EM currency index (.MIEM00000CUS) was little changed on the day, with investors refraining from placing major currency bets ahead of the U.S. inflation report.

Most emerging Europe currencies edged lower against the euro, with the most significant move being a 0.5% decline in the Hungarian forint EURHUF.

The Polish zloty EURPLN was 0.1% lower after the country's consumer price index came at 4.1% on an annual basis in June.

In Africa, South Africa's rand USDZAR was 0.5% higher against the dollar, while its stocks SA40 gained 0.7%.

S&P Global Ratings on Monday lowered its long-term foreign and local currency sovereign credit ratings on Senegal to 'B-' from 'B', citing worsening budgetary positions and higher financial requirements.

Markets in Turkey were closed for a public holiday.

Elsewhere, Thai equities surged to their highest since May 30, and the baht (TBH=TH) was higher on reports that Thailand will name a proponent of aggressive monetary policy easing as its next central bank governor.

HIGHLIGHTS:

** China's economy slows as consumers tighten belts, US tariff risks mount

** Saudi Arabia's annual inflation accelerates to 2.3% in June

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