If emerging markets had their way, this Christmas week would be like any other: quiet, with just a handful of economic releases and low trading volumes. But political dramas playing out in the U.S. are keeping investors on tenterhooks.

The U.S. government shutdown over President Donald Trump's demand for border-wall funding is likely to last past Christmas. And even though Treasury Secretary Steven Mnuchin tried to reassure financial markets that Federal Reserve Chairman Jerome Powell wouldn't be ousted, investors are nervous. Last week, the S&P 500 Index suffered its biggest weekly loss since 2011.

"If equity markets fall further, they're going to set off machine-based selling," Saed Abukarsh, the co-founder of Dubai-based hedge fund Ark Capital Management. 'The other risk is that experienced traders are on holiday, so the ones left will be trigger happy with every new headline. Meanwhile, most traditional risk takers haven't had a good year, and they're unlikely to add to their portfolios."