Emerging-market stocks retreated from a two-week high as concern the U.S. budget deadlock will hurt global economic growth drove a slump in commodity producers from OAO Mechel to Harmony Gold Mining Co.
The MSCI Emerging Markets Index dropped 0.3 percent to 1,005.69. Russia’s Micex Index snapped a four-day advance as Mechel and United Co. Rusal fell at least 1.6 percent, while Harmony Gold plunged to a 12-year low in Johannesburg. India’s S&P BSE Sensex rose to a three-week high as the nation’s trade gap narrowed to the lowest in 30 months. The Romanian leu and the Czech koruna led losses in developing-nation currencies.
U.S. President Barack Obama opened the door to talks with Republicans on topics from health care to entitlement programs if they end the impasse over the U.S. debt ceiling. Most Federal Reserve policy makers said the central bank was likely to reduce the pace of its bond purchases this year, even as they unexpectedly refrained from such a move in September, minutes of their last meeting show. Janet Yellen, the Fed vice chairman and an architect of its stimulus program, was nominated by Obama to succeed Ben S. Bernanke.
“People are concerned that the American government standstill may lead to a slowdown in the fragile global economic growth,” Ilya Kravets, the New York-based director of investment research at Daniloff Capital LLC, said by phone today. “There is a huge degree of uncertainty in the markets because of the problems in Washington.”
Eight out of 10 groups in the MSCI Emerging Markets Index decreased today, led by consumer and commodity shares. The benchmark measure for developing nations has dropped 4.7 percent this year to trade at 10.5 times projected earnings, compared with the valuation of 13.6 for the MSCI World Index, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets Index exchange-traded fund advanced 0.7 percent to $41.66. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, decreased 2.3 percent to 28.08.
Emerging-market economic growth remains “muted” with a confidence gauge just above the threshold signaling expansion, according to HSBC Holdings Plc. The HSBC Emerging Markets Index rose to 50.8 in September from 50.7 in August, the bank said today, citing a survey of purchasing managers. That’s still the third-lowest reading in more than four years. A value above 50 indicates expansion and below 50 signals contraction.
Brazil’s Ibovespa snapped a two-day rout as Tim Participacoes SA rallied after Telecom Italia SpA was said to be negotiating the sale of its controlling stake in the phone carrier, outweighing a drop in commodity exporters.
The Micex Index lost 0.3 percent in Moscow after rising to the highest since Feb. 20 yesterday. Mechel, the nation’s biggest producer of coal for steelmakers, slid 1.6 percent. Rusal, a Moscow-based aluminum producer, slumped the most since Sept. 19. Russia’s ruble rebounded, while the leu, the koruna and the forint led losses among 17 out of the 24 developing-nation currencies tracked by Bloomberg.
The FTSE/JSE Africa All Shares Index dropped for a fourth day in the longest losing streak since June 24. Harmony Gold sank 2.6 percent, while AngloGold Ashanti Ltd. slid 3.4 percent.
India’s S&P BSE Sensex added 1.3 percent, erasing earlier losses. Sun Pharmaceutical Industries Ltd., which gets more than half of its sales from abroad, climbed to a record. Software exporter Infosys Ltd. increased the most in a month. HDFC Bank Ltd. jumped to a three-week high.
China’s stocks rose to a two-week high as speculation that cities from Qingdao to Tianjin will win government approval for free-trade zones fueled rallies for port operators and logistics companies. Tianjin Port Co., Tianjin Marine Shipping Co. and Tianjin Quanye Bazaar (Group) Co., a department store operator, all jumped 10 percent.
The premium investors demand to own emerging-market debt over U.S. Treasuries declined five basis points, or 0.05 percentage point, to 325 basis points, according to JPMorgan Chase & Co.