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Risk Off Sentiment, Russia Default, USD Strength Leave Equites Vulnerable

EMERGING MARKETS
  • Since their highs reached in February 2021, EM equities have been constantly trending lower as the surge in risk aversion has been weighing on risky assets.
  • The constant downward revisions in China growth expectation due to the zero-Covid policy have also been an important factor behind EM equity weakness.
  • MSCI EM index is down over 30% in the past 16 months and broke back below the 1,018.25 support in June, which corresponds to the 61.8% Fibo retracement of the 751.80 – 1,449.40 range.
  • Next level to watch on the downside stands at 982.70 (May 12 low).
  • On the topside, resistance to watch stands at 1,041.10 (50DMA).

Source: Bloomberg/MNI

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