Emerging-market stocks rose to a five-month high, led by Brazilian shares, after the U.S. Senate crafted an agreement to end the government shutdown and raise the debt ceiling. Mexico’s peso jumped the most in a month.
The MSCI Emerging Markets Index advanced 0.1 percent to 1,031.27, the highest level since May 22. Brazil’s Ibovespa (IBOV) climbed for a sixth day as OGX Petroleo & Gas Participacoes SA, Eike Batista’s oil company, soared 38 percent. The Shanghai Composite Index retreated 1.8 percent after China’s shares were cut at JPMorgan Chase & Co. The Mexican peso led gains among 15 out of the 24 developing-nation currencies tracked by Bloomberg.
Stocks joined a global rally as the U.S. Congress is poised to end the 16-day government shutdown and raise the debt limit after the bipartisan leaders of the U.S. Senate reached an agreement to end the nation’s fiscal impasse. The Senate and House plan to vote on the deal later today, and the White House press secretary said President Barack Obama supports the deal.
“It’s the confirmation of what the market had been anticipating,” Walter “Bucky” Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama, said in a telephone interview. “They kicked the can down the road a few months.”
Seven out of 10 groups in the MSCI Emerging Markets Index gained today, led by telephone and consumer discretionary companies. The benchmark gauge for developing nations has dropped 2.3 percent this year to trade at 10.7 times projected earnings, compared with the valuation of 14 for the MSCI World Index, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets Index exchange-traded fund advanced 0.8 percent to $42.99. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, declined 9.2 percent to 23.25.
Brazil’s Ibovespa rose 1.8 percent to the highest level since May 28. OGX surged amid speculation it will get a capital injection from investors as it negotiates with lenders to restructure debt. The Mexican peso added 1.2 percent, the most since Sept. 18, rising for a second day.
Most Russian stocks gained after a court suspended opposition leader Alexey Navalny’s five-year prison sentence, boosting appetite for Russian equities. OAO Gazprom, the nation’s biggest company and natural gas exporter, rose to the highest level in a year.
The Budapest Stock Exchange Index slid the most since Aug. 27. Mol Nyrt. dropped to the lowest level in two years after Napi Gazdasag reported Norway’s sovereign wealth fund may review investments in the Hungarian oil refiner embroiled in a corruption probe in Croatia.
China’s stocks fell the most in three weeks as companies linked to Shanghai’s free-trade zone sank on concern valuations are excessive. Shanghai International Port (Group) Co. (600018) and Shanghai Waigaoqiao Free Trade Zone Development Co. plunged more than 8 percent after more than doubling since Aug. 22.
The premium investors demand to own emerging-market debt over U.S. Treasuries rose four basis points, or 0.04 percentage point, to 319 basis points, according to JPMorgan Chase & Co.
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