Emerging market stocks slumped to a two-week low Wednesday, as pressure continued to mount on curries in developed economies around the world amid a surge in the U.S. dollar and concerns over the impact of trade tensions on global economic growth.

Indonesia was at the forefront of today's downside move, with stocks in the southeast Asian country falling 3.76% while the rupiah held at a near 20-year low against the U.S. dollar as its reliance on imported oil and its sensitivity to a slowing Chinese economy hammered investor sentiment. In fact, stocks around the Asia region trade sharply lower Wednesday, with shares in Hong Kong falling 2.65% -- the biggest single-day decline since June 19 -- following weaker-than-expected data from China's services sector and the broader emerging market malaise.

Talk that Indonesia will fall into the same fate as other troubled emerging countries like Argentina, Turkey or South Africa has sent Indonesian stocks to its worst intraday drop in three years. pic.twitter.com/PIA9oXDEsm

— D.A. MARKET SECURITIES (@itradeph) September 5, 2018

The benchmark MSCI International Emerging Markets index was marked 0.66% lower by mid-day in Europe and trading at 1,040.17 points, the lowest level since August 23, while India's Sensex index was seen 0.4% to the downside, extending its five-day slide to 2.3%. 

Most major Emerging market benchmarks either in or near so-called 'bear market' territory, which defines a market that has fallen 20% from its recent peak and each of the three major emerging market ETFs, which collectively hold around $143 billion in assets -- Vanguard's FTSE EM (VWO) , and iShares' Core MSCI EM (IEMG) and MSCI EM (EEM) -- have seen net asset values fall by an average of 15.3% since their January 26 peak.

Argentina's peso has been one of the worst hit currencies, having lost more than half of its value this year alone, and slumped a further 2% yesterday as President Mauricio Macri races to cut government spending and unlock $50 billion in new support loans from the International Monetary Fund.

Turkey's lira, which has fallen 40% against the dollar so far this year, hovered at around 6.68 to the greenback in early trading, but pressure remains amid a diplomatic spat with the U.S. over the release of evangelical pastor Andrew Brunson, whom Turkish officials have accused of being involved in a 2016 coup attempt, and the searing level of inflation in the $800 billion economy.

The South African rand has also been hit, falling to a one-year low of 15.6925 against the dollar as GDP data confirmed the economy entered recession in the second quarter, a move that could trigger a change in the country's last investment grade rating from Moody's Investors Service. 

Very challenging year for #EmergingMarkets as ����#USA yields are up & the #Fed has tightened. Yet, lots of idiosyncratic stories across EM: #sanctions, local #politics, weak #macro & #geopolitics. Their effects vary across EM. ����#India ����#Russia ����#Turkey @samirsinh189 pic.twitter.com/qK06BfxMzi

— VladimirMiklashevsky (@vmiklsuomi) September 5, 2018

Debt levels, however, remain the key risk factor for emerging market economies and the broader investment landscape. The Bank for International Settlements, often described as the 'central bank for central bank's, estimates that emerging market countries are sitting on $3.7 trillion in dollar-denominated debt, all of which must be serviced in increasingly expensive greenbacks. 

The dollar index, which tracks the greenback against a basket of six global currencies, is sitting at a two-week high of 95.50 and has risen more than 6% since the start of the second quarter.

The dollar is also expected to add further gains as the Federal Reserve signals future rate hikes amid a surging domestic economy, which grew 4.2% last quarter and is on pace for a similar advance in the three months ending in September, according to the Atlanta Fed's GDPNow estimate, following data showing U.S. manufacturing activity hit the fastest pace in 14 months.

At the same time, global oil prices continue to hold near the $80 a barrel mark, with Brent crude contracts trading at $77.07 in early European dealing, putting further pressure on economies that rely in imported crude.

The broader global concerns over growth, exacerbated by the U.S. China trade dispute, have raised questions over crude oil demand, although prices have been supported by the looming U.S. sanctions on the sale of Iranian crude, which come into force in November, and recent report from Reuters that suggests Saudi Arabia wants to maintain a price range between $70 and $80 a barrel over the near term to cushion the blow of scrapping the planned IPO of its state-owned oil company Saudi Aramco.

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