* Turkish lira leads decline among EM currencies
* Argentine markets set to weaken after Macri defeat
* Goldman sees no U.S.-China trade deal before 2020
By Sruthi Shankar
Aug 12 (Reuters) – Emerging markets currencies came under the shadow of political and global growth worries on Monday, with a defeat for Argentina’s business-friendly president Mauricio Macri in primary elections portending renewed weakness for the country’s local assets.
Early official results showed Argentine voters soundly rejecting Macri’s austere economic policies, raising questions about his chances of re-election in October.
A coalition backing opposition candidate Alberto Fernandez – whose running mate is former president Cristina Fernandez de Kirchner – led by a wider-than-expected 14 percentage points with 47.1% of votes, with fourth-fifths of ballots counted.
Argentine government bonds slumped and analysts were expecting sharp declines for the peso and the main S&P Merval stock index when markets open, amid concerns about a possible return to populism and intervention in the markets under the Peronists.
In European trading hours, the Turkish lira, the South African rand and the Mexican peso peso all fell about 1%.
“The weakness is a reflection of investors bracing for some contagion out of Argentina,” said Koon Chow, an emerging market macro and FX strategist with UBP. “The paucity of trading in Argentine assets â€“ given the time zone â€“ has caused some weakness in currency markets in EM.”
Turkey’s lira led the decline among currencies, on track to post its biggest percentage fall in over a month, amid worries about political intervention in its central bank after the dismissal of its chief economist and some department managers on Friday.
Stock markets in Turkey, India other regional markets were closed for holidays.
The rand hit an 11-month low, while Russia’s rouble fell 0.4% despite a sovereign rating upgrade by Fitch on Friday.
Emerging markets were coming off a tumultuous week marked by worries about the heightening U.S.-China trade war and moves in the U.S. bond market flagging recession risks.
Goldman Sachs on Sunday said fears of the trade war leading to a recession were increasing and it no longer expected a trade deal between the world’s two largest economies before the 2020 U.S. presidential election.
Chinese stocks, however, were on the rise, as Beijing showed support for its capital markets by relaxing margin financing.
Saudi Aramco, the world’s top oil producer, reported a 12% fall in half-year net profit, largely due to a fall in the average realised price of crude oil.
India’s Reliance Industries said Aramco signed a letter of intent to take a 20% stake in Reliance’s oil-to-chemicals business in one of the largest ever foreign investments in India. For GRAPHIC on emerging market FX performance 2019, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2019, see https://tmsnrt.rs/2OusNdX
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