EMERGING MARKETS-Asian stocks slip, currencies steady as markets await Fed cut and 2026 outlook

By Shivangi Lahiri

Dec 9 (Reuters) - Emerging Asian equities slipped on Tuesday and currencies consolidated as caution prevailed ahead of an expected rate cut by the U.S. Federal Reserve, with investors looking for clearer signals on the monetary policy outlook through 2026.

The MSCI index of emerging Asia equities .MIMS00000PUS fell 0.7%, its biggest one-day drop in more than two weeks. MSCI's gauge of emerging market currencies .MIEM00000CUS was flat.

While markets are more than 86% priced for a 25-basis-point cut on Wednesday, attention is shifting to what the Fed signals beyond the move, and to who might succeed Jerome Powell when his term as chair expires next May. 0#USDIRPR

"The risk is that markets may be overly dovish in terms of 2026 projection and it is highly plausible that the Fed fails to outdove expectations," said Christopher Wong, FX and rates strategist at OCBC.

"A hawkish-cut outcome may pose upward risks for USD and weigh on risk proxies and Asian FX," Wong said, adding that some investors have taken profits or lightened their positions ahead of the Fed decision.

Equities in Malaysia .KLSE and Indonesia .JKSE were down 0.3% and 0.4% respectively, while the ringgit MYR= slipped 0.2%. The rupiah IDR=, on the other hand, inched up 0.1%.

Stocks in the Philippines .PSI declined 0.2%, while the Philippine peso PHP= was largely unchanged.

Investors are looking forward to the Bangko Sentral ng Pilipinas' (BSP) decision on Thursday, which would follow the Fed rate decision.

A Reuters poll of economists expects the Philippine central bank to cut its key interest rate by 25 basis points to support the domestic economy amid weak growth and slowing inflation, while also anticipating at least one more reduction early next year.

The Fed's outlook for 2026 could also provide "breathing room" for emerging Asian central banks, although Wong noted that they would follow their own policy cycles as individual domestic drivers dominate.

Elsewhere, South Korean stocks .KS11 fell 0.3%, dragged lower by chipmakers Samsung Electronics 005930.KS and SK Hynix 000660.KS.

SK Hynix dropped after the Korea Exchange issued an investment warning, noting the stock has more than doubled this year on AI-driven gains.

Other regional currencies were mostly steady, with the South Korean won KRW=KFTC and the Singapore dollar little changed, while Taiwan's dollar TWD=TP inched up 0.2%.

HIGHLIGHTS:

** Thailand-Cambodia fighting spreads along contested border

** China's Li says tariff consequences increasingly evident

** Hong Kong exchange, regulator ask banks to maintain quality of IPO applications

** Thailand foreign tourist arrivals down 7.19% y/y so far this year

(Reporting by Shivangi Lahiri in Bengaluru; Editing by Sonali Desai)

((shivangi.lahiri@thomsonreuters.com))