Monday is the international day for the remembrance of the slave trade and its abolition. But, while human slavery has been substantially reduced since President Lincoln’s proclamation in 1862, most global equity markets and developing economy currencies remain very firmly enslaved to the trend in the US economy and the direction of Wall Street. The domestic story, especially in economies like Russia that are so dependent on commodity exports, is only of secondary importance. If the recent deterioration in the US growth trend continues then equity markets elsewhere are more likely to suffer from further emaciation than to achieve emancipation.

Russia: Prisoner in a Gilded Cage

After recording very strong gains in July, developing market equities and currencies face a very testing start to the new month. As last week ended, confidence in a strong global economic rebound was again slipping and Sunday’s lower than expected PMI in China will only add to investor worries on Monday. Whether equities and currencies in developing markets can extend last month’s gains or see them reverse will depend on the strength of this week’s economic reports in the US and Europe. Where the dollar trades will also be highly significant for Russian investor sentiment.