Emerging-market stocks rose for a fourth day as OAO Gazprom followed oil higher while investors awaited the outcome of a U.S. budget standoff. Brazil’s real capped the biggest weekly advance among major currencies.
The MSCI Emerging Markets Index added 0.3 percent to 1,007.92, extending a weekly increase to 0.8 percent. Gazprom, Russia’s natural gas exporter, climbed the most in two weeks, while Kia Motors Corp. (000270) paced gains in South Korea. The Ibovespa rose for the first time in three days as Cia. Siderurgica Nacional SA led steelmakers higher after Brazil increased tariffs on imports to safeguard the local industry. The real climbed 1.8 percent for the week, the most among 16 currencies.
Oil rose 0.5 percent to settle at $103.84 a barrel in New York as Tropical Storm Karen retained strength on a path through the Gulf of Mexico to the U.S. coast, threatening production in the region. A partial shutdown of the U.S. government entered a fourth day amid wrangling by lawmakers over the budget and debt limit. House Speaker John Boehner has been telling fellow Republicans that he won’t allow the U.S. to default on its debt, according to two Republican congressional aides.
“It’s very unlikely that the U.S. will default,” Alec Young, a global equity strategist at S&P Capital IQ in New York, said by the phone today.“That doesn’t mean, however, that uncertainty won’t go on.”
Nine out of 10 groups in the MSCI Emerging Markets Index rose today as consumer stocks had the biggest gains. The benchmark measure for developing nations has dropped 4.5 percent this year to trade at 10.6 times projected earnings, compared with the valuation of 13.9 for the MSCI World Index, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets Index exchange-traded fund rose 1.3 percent to $42.11. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, declined 3.9 percent to 24.41.
Brazil’s Ibovespa rose 0.7 percent, reducing this week’s drop to 1.7 percent. CSN climbed 3.3 percent. Earlier losses in the benchmark gauge were driven by Petroleo Brasileiro SA as Moody’s Investor’s Service lowered its credit ranking to Baa1, the third-lowest investment-grade rating. The state-controlled oil producer rebounded after sinking as much as 2.5 percent.
The real rallied this week as Brazil’s central bank maintained a $60 billion intervention program to support the currency and curb inflation by limiting import prices. The currency has climbed 10 percent since the program was announced Aug. 22, a day after the currency touched a 4 1/2-year low.
The Micex Index climbed 1.2 percent in Moscow, the most among major emerging-market gauges. Gazprom rallied 1.9 percent as oil jumped. Karen, no longer expected to become a hurricane, will make landfall early Oct. 6 on the southeastern tip of Louisiana and then again close to Mobile, Alabama, according to the National Hurricane Center.
The Hang Seng China Enterprises Index, also known as the H-share index, was little changed today. Man Wah Holdings Ltd. (1999), a sofa maker that gets half its sales from the U.S., declined 2.7 percent. Galaxy Entertainment Group Ltd., the casino operator controlled by billionaire Lui Che-woo, slumped 3.1 percent. Mainland markets are shut until Oct. 8 for holidays.
Kia Motors rebounded from the lowest level since Aug. 23. SK Hynix Inc. (000660) jumped 4.2 percent to a four-month high.
Indian automakers and consumer companies advanced after the government said state-run banks will increase lending to the industries. The nation’s benchmark stock index rose for the fifth week in six. Tata Motors Ltd. (TTMT), the nation’s biggest automaker, rose 1.2 percent to a record after Deutsche Bank AG upgraded the stock. The rupee advanced 1.7 percent this week.
Indonesia’s rupiah forwards completed a weekly gain after data showed the nation’s trade balance swung into the first surplus in five months and inflation slowed. Thailand’s 10-year government bonds completed a fourth weekly gain as foreigners increased holdings after the nation’s debt management agency said it will reduce issuance this quarter.
The premium investors demand to own emerging-market debt over U.S. Treasuries declined six basis points, or 0.06 percentage point, to 334 basis points, according to JPMorgan Chase & Co.
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