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EM stocks down 0.8%, FX down 0.06%

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Israel's 2026 budget may hold key to government's survival

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China bans foreign AI chips from state-funded data centres

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Czech inflation picks up in October

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Polish central bank decision due later in the day

By Pranav Kashyap

Nov 5 (Reuters) - An emerging market stocks index

stumbled to a two-week low and currencies lost ground on

Wednesday, as jittery investors pulled back from risk amid

mounting valuation concerns, while Poland prepared for an

expected rate cut.

The Polish zloty was set to snap a six-day losing

streak - its longest in over one year, while Warsaw's benchmark

index rose 0.3%, as investors geared up for a widely

expected 25-basis-point rate cut by the National Bank of Poland.

The move would lower borrowing costs to 4.25%, marking

another step in the central bank's easing cycle.

Poland's inflation came in softer than forecast at 2.8%

year-on-year in October, preliminary data had showed. That's the

fourth straight month within the central bank's target range of

2.5% ±1 percentage point - reinforcing bets on further monetary

loosening.

"We will watch the statement to see if anything changes to

the 'rate adjustment' wording and what the new inflation

forecast will show given the lower numbers in recent months and

the government's freeze on energy prices for the coming months,"

said Chris Turner, global head of markets and regional head of

research, UK and CEE at ING.

Thursday's press conference by Governor Adam Glapinski will

be key, he added.

Consumer prices in the Czech Republic rose 0.5%

month-on-month in October, lifting annual inflation to 2.5%,

according to preliminary data - a reading that strengthens the

case for the central bank to keep interest rates unchanged at

its Thursday meeting. Economists polled by Reuters widely expect

the benchmark rate to hold steady at 3.5%.

The Czech koruna edged higher, while Prague stocks

rose 0.4%.

Meanwhile, South Africa's rand was just off an

over-one-month low, while stocks hovered at over-one

month lows. Fresh PMI figures showed private sector activity

contracted for the first time in seven months in October.

VALUATION FEARS TRIGGER RISK-OFF MOOD

A broad gauge of emerging market stocks extended

its slide for a second straight day, shedding nearly 1% to hit

its lowest level since October 20. Meanwhile, a similar index

tracking EM currencies fell for the fifth

consecutive session, at its lowest point in over three weeks.

Overnight, Wall Street's top banks sounded the alarm on a

potential equity market correction, citing stretched valuations.

The CEOs of Morgan Stanley ( MS ) and Goldman Sachs ( GS )

stoked fears of a looming bubble, fuelling a risk-off sentiment.

Asian markets bore the brunt, with South Korean and

Taiwanese equities leading the declines. Seoul's benchmark

tumbled nearly 3%, its sharpest daily drop in over three

months, while Taipei stocks notched their biggest loss

in more than a month.

China's equity markets bucked the global downtrend, with the

CSI 300 rising 0.5% and the Shanghai Composite

edging up 0.2%. The gains came after the State Council's tariff

commission announced a one-year suspension of its 24% additional

levy on U.S. goods - though a 10% tariff remains in place -

following last week's meeting between Presidents Xi Jinping and

Donald Trump.

In a setback for U.S. chipmakers, Reuters reported that

Beijing has issued guidance requiring new state-funded data

centers to use only domestically-produced AI chips, signalling a

push to reduce reliance on American technology.

Israel's shekel slipped to an over one-week low,

while Tel Aviv stocks fell 0.5%. Finance Minister

Bezalel Smotrich said late Tuesday that the cabinet is expected

to vote on the long-delayed 2026 state budget next month.

However, the proposal faces stiff political resistance, raising

the spectre of fresh elections.

Elsewhere, The Republic of Congo is set to tap global debt

markets with a $670 million Eurobond - its first in nearly two

decades - according to a statement released Monday. Meanwhile,

Nigeria is eyeing a $2.25 billion Eurobond issuance, bookrunner

Chapel Hill Denham said.