Emerging-market stocks fell, snapping a two-day gain, after U.S. jobless claims rose more than forecast and concern grew that Europe’s debt crisis will hurt banks. Commodities sank, and oil fell to a four-month low.
The MSCI Emerging Markets Index declined 1 percent to 1,105.31 as of 4:30 p.m. in New York. The gauge has fallen 5.6 percent this quarter, headed for its first three-month retreat in a year. Mexico’s IPC index dropped for the first time in four days, declining 0.2 percent. The Micex slid 2 percent in Moscow, Taiwan’s Taiex dropped 0.6 percent and South Korea’s Kospi slid 0.4 percent.
Applications for jobless benefits increased by 9,000 to 429,000 last week, Labor Department figures showed, exceeding the highest estimate in a Bloomberg survey of economists. European Central Bank President Jean-Claude Trichet said risk signals for financial stability in the euro area are flashing “red” as the debt crisis threatens to infect banks.
The U.S. economic recovery is progressing “more slowly” than expected, Federal Reserve Chairman Ben S. Bernanke said yesterday. The Fed’s Open Market Committee said it will complete a $600 billion bond-purchase program, known as QE2, as scheduled this month.
“The FOMC meeting left a pretty downbeat impression and indeed we seem to be in something of a sour spot whereupon U.S. growth is feeble, but not bad enough for a bout of QE3,” Timothy Ash, head of emerging-market research at Royal Bank of Scotland Group Plc in London, wrote in an e-mailed note. “This means a combination of less liquidity plus weaker global growth, which is not particularly appealing.”
Fed officials lowered their forecasts for U.S. growth and employment this year and next, projecting the economy will expand by 2.7 percent to 2.9 percent this year, down from forecasts ranging from 3.1 percent to 3.3 percent in April.
The Czech koruna fell 0.1 percent against the euro after the local central bank left the two-week repurchase rate at 0.75 percent, a record low, for a 13th month.
The ruble weakened by 1.2 percent against the dollar as oil slid as much as 6 percent in New York. The South African rand depreciated 0.8 percent against the dollar. The price of gold, a key South African export, fell from a seven-week high.
The Thomson Reuters/Jefferies CRB Index of 19 raw materials declined 2.3 percent and oil for August delivery dropped 4.6 percent to settle at $91.02 a barrel, its lowest price since Feb. 18, on the New York Mercantile Exchange.
Hungary’s BUX Index tumbled by 1 percent after Goldman Sachs Group Inc. cut its price target for Mol Nyrt., the country’s largest oil refiner, and the telecommunications watchdog issued a decree calling on Magyar Telekom Nyrt. to change the terms of its contracts with mobile phone clients to avoid “shocking bills.”
China’s Shanghai Composite Index rose 1.5 percent, the most since March 7. Anhui Conch Cement Co. and Sany Heavy Industry Co. led increases after China Business News reported the government may release a five-year development plan for the construction machinery industry and the China Daily said the dams. China Shenhua Energy Co. jumped 2.9 percent on the nation’s plan to build more coal-fired power plants.
India’s Bombay Stock Exchange Sensitive Index, or Sensex, advanced 1 percent in Mumbai as some investors judged recent losses as excessive. The gauge has dropped 14 percent this year. Reliance Industries Ltd., India’s most valuable company, increased 2.9 percent.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose eight basis points, or 0.08 percentage point, to 324, according to JPMorgan Chase & Co.’s EMBI Global Index.
The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps rose eight basis points to 210.