Emerging-market stocks advanced amid speculation the European Central Bank is preparing stimulus measures and as the Standard & Poor’s 500 Index rose above 2,000 for the first time.
Oil producer Petroleo Brasileiro SA surged to the highest close since October 2012 in Sao Paulo while chemical company Alpek SAB climbed to a seven-month high in Mexico City. The MSCI Emerging Markets Index added 0.2 percent to 1,085.29 in New York, the highest since August 2011. Samsung (005930) Electronics Co. led a retreat in technology companies on concern quarterly earnings will disappoint. Aluminum maker Hindalco Industries Ltd. (HNDL) plunged in Mumbai.
ECB policy makers “stand ready to adjust our policy stance further” and will use all available instruments to “ensure price stability over the medium term,” President Mario Draghi said Aug. 22, fueling speculation the central bank is moving closer to quantitative easing. Stimulus in developed markets could lead to more money heading to emerging countries, according to Paul Christopher of Wells Fargo Advisors LLC.
“Investors have bought dips in emerging markets all year, and low yields could keep a modest amount of new inflows going into EM,” Christopher, the chief international strategist in St Louis at Wells Fargo, which manages $1.3 trillion, said in an e-mailed reply. “Instead of a breakout, I’d look for dips to be bought and keep the market around the highs.”
The S&P 500 briefly rose above 2,000 before closing with a 0.5 percent gain. The number is significant from psychological and financial standpoints, according to Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc.
The premium investors demand to own emerging-market debt over U.S. Treasuries was little changed at 282, according to JPMorgan Chase & Co. indexes. The MSCI Emerging Markets Index has increased 8.2 percent this year and trades at 11.3 times projected 12-month earnings, according to data compiled by Bloomberg. The multiple for the MSCI World Index, which is up 5.1 percent in 2014, is 15.
The Ibovespa rallied 2.3 percent, the most among the world’s major stock benchmarks, as state-run companies jumped on speculation a presidential election poll will show rising support for opposition candidate Marina Silva. The index has gained 33 percent from this year’s low on March 14, the biggest increase during the span among major stock markets. Petrobras added 5.4 percent.
Alpek rose 2.6 percent in Mexico City as the IPC index gained 0.3 percent.
Samsung, the world’s largest smartphone maker, slipped 1.5 percent in Seoul. Its third-quarter operating profit may fall 14 percent from the previous three months on weak sales, Mirae Asset said in a report today. Of the 503 emerging-market companies that have reported quarterly results this season, 52 percent trailed estimates, data compiled by Bloomberg show.
The S&P BSE Sensex Index (SENSEX) trimmed a gain of as much as 0.8 percent to close with a 0.1 percent gain. Hindalco tumbled 9.7 percent, the most since November 2009, and Tata Steel Ltd. lost 4.8 percent. Giving away coal mines to companies including Tata and Jindal Steel & Power Ltd. since 1993 was illegal, India’s highest court said today, spurring concern the verdict may lead to cancellation of their permits.
Romania’s leu climbed 0.1 percent versus the euro, while the zloty appreciated the most in a week and Polish five-year bonds advanced.
The ruble lost 0.2 percent versus the dollar. Russia plans to send a second convoy loaded with humanitarian aid to Ukraine, Foreign Minister Sergei Lavrov said, after the first delivery sparked international condemnation for crossing the border without authorization.
The Micex (INDEXCF), which advanced 2 percent last week, gained 0.6 percent on speculation planned talks tomorrow between President Vladimir Putin and his Ukrainian counterpart Petro Poroshenko will lessen the likelihood for tougher sanctions. VTB Group added 2.1 percent after the government said it plans to buy shares of the nation’s second-biggest lender. Equity gauges in Poland and Hungary rose at least 0.4 percent.
The Shanghai Composite Index (SHCOMP) lost 0.5 percent as concern that new bank lending isn’t picking up overshadowed a rally for airlines. China Eastern Airlines Corp. surged 9.9 percent on the prospect it will benefit from an aviation investment fund.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 0.5 percent. China Petroleum & Chemical Corp. (386) jumped 4.3 percent to the highest level since January 2008. The company known as Sinopec posted a better-than-expected 7.5 percent increase in first-half profit.