(Bloomberg) -- Emerging-market assets fell on Tuesday, with a gauge of equities snapping a seven-day rally as investors digested fresh remarks from Federal Reserve speakers while preparing for a key earnings report from Nvidia Corp.
The MSCI gauge for developing world stocks fell 0.8%, the most in a month. An index for currencies also weakened, with the Mexican peso, Philippine peso and Thai baht among the biggest laggards.
The drop comes as the rally in Chinese shares hits pause and as investors turn their focus to Nvidia earnings on Wednesday for hints on the stock that’s been at the forefront of the AI-led rally driving emerging-market equities.
The company’s shares have surged more than 90% this year, propelling the tech- heavy Nasdaq 100 index to another record.
“There’s more of a China angle just given how strong that market has been,” Todd Sohn, an ETF analyst at Strategas Securities. “The stocks there have gone vertical, so some form of a dip isn’t terribly surprising, and today’s decline is just a natural pause.”
The Hang Seng Tech Index, tracking the 30 largest companies in Hong Kong, dropped 3.7%, the biggest one-day drop since March 5.
Wednesday’s session was also marked by a series of Fed speakers. Governor Christopher Waller said April’s inflation data were a sign that price pressures are gradually fading, adding that he needs to see “several more” months of data supporting that trend to begin easing rates.
In a separate speech, Fed Atlanta President Raphael Bostic said policymakers are holding active discussions on the level for rates that neither slows nor stimulates the economy.
“We are getting a sense that the Fed’s message of coping with an economy that remains on the growing side and inflation that has not gone away after a return in Q1 is making sense to the markets,” said Juan Perez, director of trading at Monex USA.
“From today’s comments, we assess that officials seem on the same page about considering a wait-and-see approach that looks at disinflation closely, while assessing the slowdown in other sectors and hoping for no development of ‘stagflation.’”
Monetary policy beyond the Fed was also in focus, with Nigeria’s central bank raising its key rate to curb persistent inflation and boost the nation’s bruised currency. The central bank has now lifted the key rate by 1,475 basis points since its tightening campaign began in May 2022 to temper inflation that’s accelerated.
Also on Tuesday, Hungary’s central bank reduced its key rate by half a percentage point to 7.25%, delivering what is most likely the penultimate cut in a yearlong cycle.
Policymakers signaled that the cycle will end in June, with limited room for cuts in the second half of the year.
Elsewhere, the Philippine central bank warned it will intervene in the currency market after the peso dropped past the key 58-per-dollar level.
