Emerging-market stocks rose for a sixth day as lower-than-forecast growth in U.S. payrolls fueled speculation the Federal Reserve will refrain from tapering stimulus. Brazil’s Ibovespa climbed to a seven-month high.
The MSCI Emerging Markets Index advanced 0.2 percent to 1,044.66. The Ibovespa jumped to the highest level since March 18 as iron-ore producer Vale SA (VALE5) rallied, while AngloGold Ashanti Ltd. drove the FTSE/JSE Africa All Shares Index to a record in Johannesburg. South Africa’s rand jumped to a one-month high, pacing gains among 24 developing-nation currencies.
Stocks joined a global rally after a government report showed that U.S. payrolls climbed less than projected in September, indicating the economy had little momentum leading up to the government shutdown. The jobless rate fell to an almost five-year low. The budget dispute weighed on fourth-quarter growth and will prompt policy makers to wait until March before starting to trim stimulus, a Bloomberg survey showed last week.
“The weak employment data we saw this morning would support a more accommodative Fed going forward,” Kevin Caron, a Florham Park, New Jersey-based market strategist at Stifel Nicolaus & Co., which oversees about $150 billion, said by phone. The market is “starting to price in that maybe the Fed won’t be so tight after all,” he said.
Seven out of 10 groups in the MSCI Emerging Markets Index advanced, led by commodity and utility companies. The benchmark gauge for developing nations has retreated 1 percent this year to trade at 10.8 times projected earnings, compared with the valuation of 14.4 for the MSCI World Index.
The iShares MSCI Emerging Markets Index exchange-traded fund rallied 1 percent to $43.66. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, advanced 2.1 percent to 19.26.
Brazil’s Ibovespa advanced for a third day as Vale rallied 1.3 percent. Airline Gol Linhas Aereas Inteligentes SA surged after a measure of profitability climbed in September. The real rebounded from earlier losses, while Mexico’s peso snapped a two-day drop.
Russian equities declined for the first time in three days as OAO Mechel, the nation’s biggest producer of coal for steelmakers, slumped 1.6 percent. The Borsa Istanbul National 100 Index gained for a a fifth day, led by Turkiye Garanti Bankasi AS. Benchmark gauges in Poland and Hungary retreated.
The Shanghai Composite Index retreated, led by developers, as surging home prices spurred speculation the government may tighten property curbs. Poly Real Estate Group Co. (600048) and Gemdale Corp. (600383) paced declines for property companies.
Indian (SENSEX) stocks dropped as some investors bet the benchmark index’s gain to a three-year high yesterday was excessive. Hero MotoCorp Ltd. (HMCL), the nation’s largest motorcycle maker, slid for the first time in four days. Reliance Industries Ltd. (RIL), owner of the world’s biggest refining complex, fell the most in two weeks. Software exporter Wipro Ltd. (WPRO) climbed to a 13-year high.
The FTSE/JSE Africa All Shares Index rose for a ninth day in the longest winning streak since October 2007. AngloGold Ashanti surged 7.9 percent. The rand gained 1.2 percent.
Telecom Egypt, the country’s landline phone monopoly, climbed to the highest level since February after Vodafone Plc expressed interest in buying the shares it doesn’t already own in the companies’ local joint venture. The benchmark EGX 30 Index rose 1.8 percent.
The premium investors demand to own emerging-market debt over U.S. Treasuries rose five basis points, or 0.05 percentage point, to 315 basis points, according to JPMorgan Chase & Co.
Emerging-market currencies will probably see bigger declines next year when the Federal Reserve actually starts tapering its record stimulus, Stephen Jen, co-founder of hedge fund SLJ Macro Partners LLP said.
“Emerging-market currencies will have serious moments” in 2014, Jen, the former global head of foreign-exchange at Morgan Stanley who predicted the rout in April, said at a conference in Singapore. “What we have seen this year I think is just a pre-earthquake tremor. It was only the possibility that the Fed will start tapering that caused this volatility.”
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