Emerging-market stocks dropped for a second day and currencies weakened as commodities declined and investors weighed prospects for an end to Federal Reserve stimulus. India’s benchmark index slid to a two-week low.
KGHM Polska Miedz SA, Poland’s sole copper producer, and OAO Severstal, Russia’s second biggest steelmaker, slumped as metal prices declined. The Russian ruble lead currencies lower versus the dollar. Tupras Turkiye Petrol Rafinerileri AS (TUPRS) retreated to a nine-month low after tax authorities started a probe into the Turkish oil refiner. Ambuja Cements Ltd. (ACEM) plunged 11 percent in Mumbai. Brazil’s Ibovespa advanced as oil producer Petroleo Brasileiro SA climbed.
The MSCI Emerging Markets Index lost 0.4 percent to 962.36. Reports showed today that U.S. durable goods orders increased more than analysts estimated in June while initial jobless claims rose last week, after data yesterday indicated that new home sales in the country jumped to a five-year high last month. The S&P GSCI Spot Index of commodities fell 0.2 percent.
The Fed “is always in the back of investors’ minds,” Lawrence Creatura, a Rochester, New York-based fund manager at Federated Investors Inc., which oversees about $380 billion, said by phone. “Fed actions have a mathematical link to the pricing of equities.”
Fed Chairman Ben S. Bernanke told Congress last week that any reduction in stimulus would depend on the economy’s performance. The developing-nation gauge has fallen 8.3 percent since May 22, when the Fed first signaled the central bank’s asset-buying program could be cut if the economy showed sustained improvement.
The iShares MSCI Emerging Markets Index exchange-traded fund climbed 0.6 percent to $39.92. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, fell 4.1 percent to 21.51.
Tupras slid 3.1 percent in Istanbul and parent company Koc Holding AS lost 3.9 percent. The Borsa Istanbul Stock Exchange National 100 Index dropped 0.2 percent, declining for a sixth day in the longest losing streak in almost two months.
Commodity producers declined as copper fell 0.6 percent in London. The Bloomberg Base Metals 3-Month Price Commodity Index dropped 0.4 percent. KGHM sank 2.2 percent in Warsaw. PKN Orlen SA and Grupa Lotos SA, Poland’s largest oil companies, lost at least 1.3 percent and the WIG20 Index slid 0.3 percent.
Severstal dropped 2.8 percent in Moscow and OAO GMK Norilsk Nickel, Russia’s largest producer of the metal, declined 2 percent. The Micex Index lost 0.4 percent.
OTP Bank Nyrt., Hungary’s largest lender, rose 2.1 percent in its fourth day of gains, paring this month’s losses to 4.5 percent. Nepszabadsag newspaper reported that the government has rejected “radical” plans to phase out foreign-currency mortgage loans.
Brazil’s Ibovespa (IBOV) added 1.4 percent amid speculation that this year’s worst-performing major equity index will rebound as the country’s commodity exporters report earnings that may have been boosted by a depreciating local currency. Petrobras, as the state-controlled oil producer is known, climbed 2.7 percent to a one-month high.
The MSCI developing-nations gauge has lost 8.8 percent this year, compared with a 13 percent increase in the MSCI World Index of developed-country stocks. The emerging-markets measure trades at 10.1 times 12-month projected profit, compared with the MSCI World’s 13.9 times, data compiled by Bloomberg show.
Gauges of health-care, consumer and energy stocks in MSCI’s developing-nation index fell at least 0.5 percent. Shandong Weigao Group Medical Polymer Co. (1066) tumbled 4.8 percent in Hong Kong after JPMorgan Chase & Co. cut the stock to neutral from overweight.
The Jakarta Composite Index (JCI) slumped to the lowest since July 16. Thailand’s SET Index declined 3 percent, the most in two weeks. The S&P BSE Sensex slid 1.4 percent.
The rupiah fell 0.4 percent after touching a four-year low. The won sank for the first time in five days and government bonds dropped after South Korea’s central bank reported today that the nation’s gross domestic product increased 1.1 percent in the second quarter from the previous three months, the most in more than two years.
LG Electronics Inc. (066570), the world’s second-largest television maker, declined 2.4 percent, the sharpest loss since July 3. The stock was downgraded to hold from buy at HMC Securities Co., citing lower-than-expected smartphone margins. The Kospi index lost 0.1 percent.
CSR Corp., China’s biggest trainmaker, added 2.4 percent and China Railway Construction Corp. gained 2.5 percent to the highest level since May 10. Chinese Premier Li Keqiang said yesterday the nation will speed railway construction, especially in central and western regions.
Ambuja plunged the most since 2008 in Mumbai as analysts cut recommendations for the stock after parent Holcim Ltd. (HOLN) asked the Indian company to pay $593 million to buy its stake in a subsidiary.
Phison Electronics Corp. (8299) tumbled 6.6 percent in Taipei, the most since Nov. 5. Nand flash memory product prices may drop in the third quarter as some customers may have overbooked, the Economic Daily News said, citing an unidentified official at Silicon Power Computer & Communications Inc.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose four basis points, or 0.04 percentage point, to 309 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.
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