Stocks struggle amid COVID-19 surges

LONDON: Emerging market stocks struggled to make headway on Tuesday as Taiwan and India wrestled with rising COVID-19 infections, with the latter seeing cases surge past 20 million.

Taiwan's main stock index, one of the strongest performers in Asia so far this year, was 1.7% down in a second consecutive day of heavy losses, amid a rare rise in infections.

In choppy trade, India's NSE Nifty 50 index added 0.3% as encouraging corporate earnings were offset by uncertainties around the pandemic.

Indian opposition leader Rahul Gandhi called for a nationwide lockdown after the world's biggest surge in coronavirus infections has seen the country become the second to pass the milestone of 20 million cases, after the United States.

"(Indian) markets will likely remain choppy for some time because of the uncertainties around the pandemic. Investors will be waiting for clarity on the vaccine situation, plateauing of cases and whether we will see a central level lockdown again," said Aishvarya Dadheech, fund manager at Ambit Asset Management.

The MSCI Emerging Markets Index, of which Taiwan and India are among the largest components along with China and South Korea, was flat.

Chinese markets were closed for a holiday, while stock gauges in Hong Kong and South Korea were 0.8% and 0.6% higher, respectively, with the latter ending a five-day losing streak.

With the US dollar drifting higher as investors weigh whether a roaring US economic recovery may force interest rates higher, emerging market currencies were under pressure.

MSCI's emerging markets currency index was 0.1% lower, with South Africa's rand, a barometer for wider emerging market risk sentiment, 0.6% weaker.

South Africa's government has allocated an extra 4 billion rand ($276 mln) to buy COVID-19 vaccines and extend a special distress grant to thousands of people hit by the pandemic.

Turkey's lira was 0.8% weaker in the wake of Monday's data showing annual inflation in April rose to its highest level in nearly two years, pressuring the central bank to keep policy tight.

The lira has tumbled around 13% since mid-March when President Tayyip Erdogan replaced Naci Agbal, a well-respected and hawkish central bank governor, driving up import costs for import-dependent Turkey.

Russia's rouble was 0.2% firmer against the dollar.

Russian factory activity growth slowed down in April following a smaller rate of increase in output and a renewed decline in new orders, according to IHS Markit's Purchasing Managers' Index headline reading.