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Pakistan budget sets big tax target ahead of IMF talks

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South Africa's IFP to join ANC and DA in unity government

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Argentina Senate passes Milei reform bill amid protests

By Ankika Biswas

June 13 (Reuters) - Russian assets slumped on Thursday

after new U.S. sanctions against the country, and Pakistani

equities soared after the annual federal budget, while emerging

markets stocks index hit a two-week high on cheer around soft

U.S. inflation data.

The Moscow Exchange shed 6%, on track for its

steepest one-day drop since October 2022, after new U.S.

sanctions forced an immediate suspension of trading in dollars

and euros on the leading financial marketplace. The move means

banks, companies and investors will no longer be able to trade

either currency via a central exchange.

Washington announced a new round of sanctions aimed at

cutting the flow of money and goods to sustain Russia's war in

Ukraine.

The dollar-denominated RTS stocks index and the

rouble-based MOEX fell over 1% each.

The rouble dropped to a near three-week low

against the dollar on the interbank market amid low liquidity

and strengthened to a near one-year high against the yuan.

"These sanctions are certainly nothing new and their impact

on Russian assets, including the rouble, are nowhere near as

significant as they would have been prior to the war. We see the

impact on the Russian economy as effectively negligible," said

Matthew Ryan, head of market strategy at Ebury.

Pakistan's main stock index climbed 4%, eyeing its

biggest one-day jump in nearly a year, a day after the

government's annual federal budget that included an ambitious

tax revenue target aimed to strengthen the case for a new

International Monetary Fund bailout deal.

The South African rand strengthened against the

dollar as government of national unity (GNU) talks progressed.

The Inkatha Freedom Party (IFP) will join the African National

Congress and the Democratic Alliance, as parties race for a deal

before the newly elected parliament sits on Friday.

Meanwhile, the index for EM stocks rose 0.8%,

along with a 0.1% rise in the currencies gauge.

Investors seemed to continue cheering a soft U.S. inflation

report that has kept the dollar index on a soft footing,

even when the Fed pushed out the start of rate cuts to perhaps

as late as December.

"I think markets are taking the view that it wouldn't take

much for the balance to shift towards two cuts... Futures

pricing show markets are still largely pricing in two cuts that

might largely be behind this lack of a selloff in emerging

market assets following the announcement," Ebury's Ryan noted.

Elsewhere, Argentina's Senate passed a sprawling bill that

is key to libertarian President Javier Milei's economic reform

plans. Protesters set fires and clashed with police in the

streets outside Congress.

HIGHLIGHTS:

** IMF approves second review of Sri Lanka's $2.9 bln

bailout, warns of economic risks

** Bank of Mexico says it could act to restore 'order' in

markets

** Hong Kong keeps key rate steady, tracking Fed move