Emerging Stocks Advance as Ibovespa Leads World Gains

Emerging-market stocks rose to a two-month high as a rally in Brazilian state-run companies drove the Ibovespa to the biggest gain among world’s equity indexes. India’s S&P BSE Sensex (SENSEX) jumped to a record as banks climbed.

The MSCI Emerging Markets Index increased 0.7 percent to 975.29. The Ibovespa advanced 3.5 percent, led by Petroleo Brasileiro SA and Banco do Brasil SA, after a poll showed that the government’s approval rating declined. State Bank of India surged after Goldman Sachs Group Inc. raised its recommendation. Egypt’s EGX 30 Index slumped the most in the world after the military chief confirmed speculation that he’ll seek presidency.

Nine out of 10 groups in the measure for developing-nation stocks rose as commodity companies rallied amid a five-day gain in the S&P GSCI gauge of raw materials. Brazilian President Dilma Rousseff’s approval rating dropped for the first time since street protests last year pushed her popularity to a record low. Investors also watched data showing U.S. jobless claims unexpectedly fell last week, while the economy grew more rapidly in the fourth quarter than previously estimated.

“Emerging markets are following the lead of the commodities markets,” Chad Morganlander, a Florham Park, New Jersey-based market strategist at Stifel Nicolaus & Co., which oversees about $160 billion, said in a telephone interview. “Expectations are for reacceleration of growth, and that is pushing commodity prices higher and stabilizing the emerging-market growth scenario.”

ETF Rallies

The iShares MSCI Emerging Markets Index exchange-traded fund advanced 1.3 percent to $40.42. The premium investors demand to own emerging-market debt over U.S. Treasuries slipped 0.05 percentage point to 304 basis points, according to JPMorgan Chase & Co.

The Ibovespa rose the most in almost seven months, led by Petrobras, while Banco do Brasil posted the biggest gain since July 2012. Brazil sold bonds in Europe for the first time since 2005, turning to international markets for financing just three days after Standard & Poor’s cut the country’s credit rating to the lowest investment-grade level.

Russian stocks declined from a three-week high and government bonds fell on concern the economy will suffer from a prolonged standoff between the government and the U.S. over Ukraine. OAO Sberbank, the nation’s biggest lender, dropped 3.2 percent after reporting 2013 profit that missed estimates.

India’s Sensex extended this quarter’s gain to 4.9 percent as State Bank surged after Goldman Sachs advised investors to buy the shares. The Shanghai Composite Index slid as industrial profit growth slowed and China’s money-market rates jumped.

The benchmark EGX 30 Index fell 2.7 percent, the most among 94 global indexes tracked by Bloomberg. Defense Minister Abdel-Fatah al-Seesi yesterday said he’s resigning to run for president in response to “calls by large numbers of the Egyptian people.”

To contact the reporters on this story: Julia Leite in New York at jleite3@bloomberg.net; Natasha Doff in London at ndoff@bloomberg.net

To contact the editors responsible for this story: Tal Barak Harif at tbarak@bloomberg.net Rita Nazareth, Zahra Hankir

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