EMERGING MARKETS: EM equities drop as Trump tariff threats dampen sentiment

Emerging market equities came under pressure on Tuesday with U.S. President Donald Trump's push to take over Greenland through renewed tariff threats, dampening global investor sentiment and pushing safe-haven gold to fresh records.

Trump said he would increase tariffs on goods from several European allies until the U.S. was allowed to buy Greenland. The rhetoric revived talks of the "Sell America" trade that took hold following his introduction of levies during last April's "Liberation Day".

The MSCI emerging markets stock index .MSCIEF dropped 0.5%, while the corresponding currencies index .MIEM00000CUS was little changed with the U.S. dollar coming under selling pressure. U.S. markets were set to resume trading following Monday's national holiday.

"We are a little negative on the dollar this year for macro reasons. But a 10% sell-off akin to last April's 'sell America' theme looks unlikely," ING analysts said.

EM equities have been resilient to geopolitical noise so far this year, brushing aside tensions in multiple regions, including Venezuela and Iran, to trade at record highs.

Still, with upcoming elections in multiple countries, particularly in the Latin American region, analysts expect some volatility through the year.

STOCKS, CURRENCIES DRIFT LOWER

Most stock indexes in central and eastern Europe were flat to lower, with Poland's .WIG20 dropping the most, down 1.5%. Czech Republic's shares .PX fell 0.8%.

Both Hungary's .BUX and Romania's .BETI benchmark stock indexes were little changed.

The central bank in Romania held its benchmark interest rate steady at 6.5% as widely expected on Monday. Analysts at ING expect the bank to resume rate cuts in May following a clearer fiscal plan for 2026 as well as a further decline in inflation.

Most regional currencies were range-bound against the euro, with the exception of Hungary's forint EURHUF=, down 0.4%, after ending last week higher.

Over in Asia, most stocks ended lower with those in South Korea .KS11 snapping a 12-day win streak. Thailand's SET Index .SETI bucked the trend, gaining 1.3%.

Markets will keep a close watch on Trump's comments in Davos, where he is expected to meet global business leaders and deliver a special address at the World Economic Forum's annual meeting.

Also on the radar will be the Supreme Court's rulings later in the day, with investors watching to see if a decision on tariffs will be provided.

HIGHLIGHTS:

Indonesia pledges central bank independence as rupiah hits record low

Trump's Europe tariff threat over Greenland revives talk of 'Sell America' trade

China plans new measures to spur consumption for next five years

For TOP NEWS across emerging markets Read full story

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

-Twesha Dikshit and Ragini Mathur/Reuters