Emerging-market stocks and currencies fell sharply after strong U.S. economic data reduced expectations for multiple Federal Reserve rate cuts this year. MSCI’s currency benchmark dropped more than 0.3%, marking its largest one-day loss since July, while a similar gauge for equities slipped 0.7%, the steepest decline since late August. 

Traders now see a diminished chance of two Fed cuts by year-end, as U.S. growth accelerated and jobless claims fell. Sentiment was further pressured by geopolitical risks, including rising tensions between Russia and NATO and fiscal concerns in countries such as Poland and Indonesia. 

The Philippine peso and Indonesian rupiah led declines, while the Polish zloty and Hungarian forint also weakened on regional political and energy disputes. 

Finsum: Despite recent setbacks, some strategists still expect emerging-market assets to recover toward year-end on macro tailwinds and favorable seasonality.