Emerging market equities fell for the second straight year as concerns over high global inflation fueled nerves over a Chinese economic slowdown and tighter funding conditions from the US.

The FTSE Emerging Index, a broad barometer of developing country stocks, fell about 0.9 percent in US dollars on Thursday.

The moves came after Turkey’s central bank cut rates for the third time in three months, raising concerns about its methods of dealing with rising inflation. In India, shares in Paytm owner One Communications fell 27 percent after its $ 2.5 billion IPO.

“The situation in emerging markets is just not very positive right now given the combination of less than excellent growth and inflationary pressures,” said Salman Baig, Portfolio Manager at Unigestion.

The Stoxx Europe 600 share index closed 0.5 percent lower as energy and mining companies underperformed. The London FTSE 100 fell by the same amount.

Wall Street was largely unaffected, with the broad-based S&P 500 index rising 0.3 percent to hit a record closing high, although it stayed below its all-time high earlier in the month. The technology-oriented Nasdaq Composite Index was up 0.5 percent in the end.

In China, investors have been terrified by Beijing’s apparent unwillingness to support the country’s economically important real estate sector and liquidity problems with many property developers.

Analysts believe this will hit materials exporters like Brazil and South Africa, whose economies have been ridden by Chinese economic and infrastructure spending, while soaring food and fuel prices have hurt consumption in developing countries.

A strong dollar, which has firmed in recent weeks as traders prepared for the US Federal Reserve to raise rates from a record low over the next year, has also raised concerns about EM companies borrowing in the global reserve currency.

The dollar index, which measures the US currency against six others, fell just below a 16-month high on Thursday after rising more than 1.5 percent so far this month.

The Turkish lira surpassed TL11 against the dollar on Thursday, its lowest level in history after the country’s central bank cut rates by 1 percentage point to 15 percent.

Line graph against the US dollar (lira per $) showing the Turkish lira falling to a record low against the dollar

Turkey’s central bank, over which President Recep Tayyip Erdogan has increasingly taken control and at the same time takes an unorthodox view that higher borrowing costs exacerbate inflation, also cut interest rates by an unexpectedly low 2 percentage points last month.

In October, the annual consumer price inflation rate in Turkey rose to 20 percent.

“Investors mostly see Turkey as a sideline, but we can’t be satisfied with that,” said Remi Olu-Pitan, multi-asset fund manager at Schroders.

“It reflects issues like high inflation and weak consumer demand that exist in other emerging markets,” she added. “So it might be too thought about [which country] is next to.”

Other market movements:

  • The yield on the ten-year benchmark government bond, which moves in the opposite direction to the price of the bond and influences borrowing costs worldwide, was 1.58 percent, 0.01 percentage points lower.

  • The U.S. sold $ 14 billion in inflation-linked government bonds on Thursday due to strong demand. The rate of return at which the debt was sold was the lowest ever on an auction.

  • Brent crude, the oil benchmark, rose 1.2 percent to $ 81.24 a barrel.

  • The shares of the salad chain Sweetgreen rose 77 percent on its trading debut on the New York Stock Exchange, valued the company at more than $ 5 billion.

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