Emerging-market stocks advanced for the first time in seven days as China’s manufacturing unexpectedly strengthened and higher crude oil prices boosted producers. Brazil’s real tumbled to a four-year low.
The MSCI Emerging Markets Index increased 0.7 percent to 954.15, after slumping 2.2 percent over the previous six trading days. The Shanghai Composite Index climbed 1.8 percent as Jiangxi Copper Co. and China Shenhua Energy Co. surged. Oil company Petroleo Brasileiro SA paced gains in Brazil’s Ibovespa, while OAO Gazprom rallied in Moscow. Twenty three out of the 24 developing-nation currencies tracked by Bloomberg retreated as the Brazilian real declined 1.2 percent.
Stocks joined a rally in commodities amid expectations of higher Chinese demand for raw materials. The unexpected gain in manufacturing suggests a slowdown in the world’s second-largest economy may be stabilizing as the government rolls out targeted measures to support growth. Equities also rose as European Central Bank President Mario Draghi said the ECB expects rates to remain low for an extended period, a day after the Federal Reserve kept its stimulus pace.
“There’s been a lot of warnings about slowdowns in developing economies, but in reality, those economies are still growing much faster than developed markets,” Audrey Kaplan, the New York-based head of international equities for Federated Investors Inc., said by phone. Her firm manages about $377 billion in assets. “The pendulum could swing pretty quickly” as data improve, she said.
Eight out of 10 groups in the MSCI Emerging Markets Index gained as commodity shares rose at least 1.1 percent. The broad gauge has dropped 9.6 percent this year, compared with a 14 percent increase in the MSCI World Index. The developing-nation gauge trades at 10.1 times projected earnings over 12 months, lower than the 13.9 multiple for the developed countries measure, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets Index exchange-traded fund added 1.8 percent to $39.72. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slumped 5.3 percent to 22.04.
Brazil’s Ibovespa, the worst-performing major equity benchmark this year, rose for the first time in four days. Petrobras climbed after saying crude and liquefied natural gas output in Brazil increased 4.6 percent in June. JBS SA, the world’s largest poultry producer, surged the most since March 2012 after its U.S. unit reported profit that beat estimates. The real dropped to the weakest level since March 2009.
The Mexican IPC index gained 2.5 percent, the most since November 2011, as homebuilder Desarrolladora Homex SAB jumped, extending a two-day rally to 63 percent.
The Micex Index increased the most in three weeks as Gazprom rose 1.1 percent. OAO Mechel, a coking-coal producer, climbed 3.1 percent after Yildirim Group of Turkey agreed to buy ferroalloy assets from the company for $425 million. The ruble snapped eight days of losses, rebounding from the lowest level in almost four years, as Bank Rossii stepped up interventions to curb currency swings.
Benchmark gauges in the Czech Republic and Poland gained at least 1 percent, while stocks in Hungary retreated. The FTSE/JSE Africa All Shares Index rallied 1.5 percent in Johannesburg as Harmony Gold Mining Co. surged.
The Shanghai Composite Index advanced for a third day as Jiangxi Copper and China Shenhua Energy led gains for metal and energy shares after the government’s Purchasing Managers’ Index jumped to 50.3, above the level of expansion.
Indian stocks fell for a seventh day as a trading halt at the nation’s biggest exchange for spot commodities spurred concern that some investors may sell equities holdings to meet margin calls.
Financial Technologies (India) Ltd. sank 65 percent after its unit National Spot Exchange Ltd. suspended trading in some contracts, merged the delivery and settlement of all others and deferred them for a period of 15 days. Adani Ports and Special Economic Zone surged 13 percent after earnings beat estimates.
Celltrion Inc. fell from a record after the South Korean drugmaker said newspaper reports yesterday it may be bought by AstraZeneca Plc. contain inaccurate information.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell 0.11 percentage point to 316 basis points, according to JPMorgan Chase & Co.