Emerging-market stocks climbed to a four-month high, led by Russian shares, as commodity producers including OAO Gazprom and OAO Mechel advanced. South Korea’s won touched the strongest level since January.
The MSCI Emerging Markets Index increased 0.7 percent to 1,029.85. Russia’s Micex Index (INDEXCF) rallied to an eight-month high as Gazprom and Mechel jumped at least 1.8 percent, while Brazil’s Ibovespa (IBOV) climbed for a fifth consecutive day as Cia. Hering led shares of retailers higher. Mexico’s IPC Index led losses among the 94 world equity gauges tracked by Bloomberg. The won strengthened 0.5 percent, pacing gains in currencies.
The House will vote on a bill that would prevent U.S. borrowing authority from lapsing Oct. 17 and end a 15-day government shutdown, following through on a maneuver that put Senate talks on hold. After the close of the market, Fitch Ratings placed the U.S.’s AAA ratings on watch for a possible downgrade, citing the lack of a deal on the federal debt.
“The short-term driver is the ongoing negotiations in regards to the debt ceiling,” Jason Benowitz, who helps manage about $4.5 billion at Roosevelt Investment Group Inc. in New York, said by phone. “The closer the parties get to a resolution, the more interest there is in risk assets including emerging-market equities. Conversely, if time goes on and we move past that key October 17 date without a deal, then we would expect those assets to respond by selling off.”
Eight out of 10 groups in the MSCI Emerging Markets Index advanced today, led by technology and consumer discretionary companies. The benchmark gauge for developing nations has dropped 2.4 percent this year to trade at 10.7 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 retreated 1 percent to $42.66. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, surged 5.8 percent to 25.61.
Brazil’s Ibovespa rose to a one-month high as Cia. Hering jumped after a report showed the industry’s sales increased more than forecast in August. MMX Mineracao e Metalicos SA, the mining company founded by Eike Batista, rallied after Trafigura Beheer BV and Mubadala Development Co. agreed to buy a controlling stake in its iron-ore port in Rio de Janeiro state.
The IPC slid 1.6 percent as Bolsa Mexicana de Valores SA, the operator of Mexico’s stock exchange, capped the biggest decline since May 2012.
The Micex Index increased 1.4 percent in Moscow, the highest since Feb. 13. OAO Gazprom, the natural gas export monopoly, rallied 2.3 percent. OAO Mechel, Russia’s biggest producer of coal for steelmakers, added 1.8 percent. Benchmark gauges in the Czech Republic and Hungary added more than 0.8 percent, while Poland’s WIG20 Index dropped 0.3 percent.
Indian (SENSEX) stocks dropped amid concern the rally that drove the benchmark index to a three-year high may have outpaced the prospects for earnings growth. HDFC Bank Ltd. (HDFCB), the largest lender by market value, slid the most in two weeks after posting the slowest profit growth in four years. Reliance Industries Ltd. (RIL), owner of the world’s biggest oil-refining complex, erased an intraday gain of 3.3 percent.
The Shanghai Composite Index capped its first loss in three days as declines for financial and consumer-discretionary companies overshadowed gains for health-care shares. Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. slid at least 1 percent and were the biggest drags on the gauge. Suning Commerce Group Co., China’s largest electronics retailer by market value, plunged 5.9 percent.
The yuan climbed to a 20-year high after China’s foreign-exchange reserves advanced to a record in a sign of capital inflows. The won climbed 0.5 percent to 1,066.75 per dollar in Seoul, according to data compiled by Bloomberg. It earlier touched 1,066.63, the strongest level since Jan. 24.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell six basis points, or 0.06 percentage point, to 314 basis points, according to JPMorgan Chase & Co.
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