Emerging-market stocks fell from a seven-month high amid worse-than-estimated earnings reports from Taiwan to Russia and as investors weighed the timing for a possible U.S. interest-rate increase.
Hyundai Heavy Industries Co. and Catcher Technology Co. each fell more than 5 percent each in Seoul and Taipei after posting results that missed forecasts. Benchmark indexes in Hungary, Indonesia and Taiwan slid at least 1 percent. The Ibovespa dropped 0.9 percent on speculation a rally that drove Brazilian stock valuations to a five-year high was excessive amid an economic slowdown. The Thai baht lost 0.6 percent versus the dollar after a surprise cut in interest rates.
“A bit of a pullback makes sense after the strong performance in recent weeks,” Maarten-Jan Bakkum, a senior emerging-market strategist at NN Investment Partners in The Hague, said by e-mail. “The main worries remain. The growth outlook for emerging markets, on a gross-domestic-product level and on an earnings level, remains bleak.”
The MSCI Emerging Markets Index fell 0.7 percent to 1,059.51 as all 10 industry groups retreated. The gauge rallied for the past six days, taking its valuation to the highest since 2010, amid bets China will boost stimulus. The measure has added 8.8 percent in April, heading for the biggest monthly gain since January 2012.
Federal Reserve officials said in a policy statement that the U.S. economy weakened, partly for reasons that will fade, after a sharp slowdown reinforced speculation that officials will keep interest rates near zero. Expectations for the first increase since 2006 have shifted out to September from June as the economy weakened in the first quarter.
Economic growth slowed during the winter months, in part reflecting transitory factors, the Federal Open Market Committee said Wednesday in Washington. The Fed repeated it will raise rates when it sees further labor-market improvement and is “reasonably confident” inflation will move back to its 2 percent goal over time.
“This was a very well anticipated Fed meeting,” said Timothy Ghriskey, the chief investment officer at Solaris Asset Management LLC in New York, who helps manage about $1.5 billion in assets. “Usually you see some great up and downs, but we saw little reaction in emerging markets. It was a ‘no news’ Fed meeting. The Fed signaled that it’s going to stay its course.”
Shipbuilder Hyundai Heavy dropped the most in two months. The Kospi index declined 0.2 percent. Catcher tumbled 6.9 percent after its first-quarter net income trailed estimates.
Russia’s dollar-denominated RTS Index rose 0.2 percent. Natural-gas exporter OAO Gazprom said 2014 profit fell 86 percent on soaring foreign-exchange losses, while the ruble’s weakness helped it generate record free cash flow.
The Ibovespa retreated after the gauge traded at the highest level since 2010 on Tuesday. Vale SA, the world’s largest iron-ore producer, tumbled 7.9 percent, the most since August 2011.
The Hang Seng China Enterprises Index slid 0.8 percent after the nation’s biggest brokerage restricted the number of shares eligible for margin lending. China Communications Construction Co. declined more than 4 percent in Hong Kong and Shanghai after Citic Securities Co. included the stock among those it won’t accept as collateral for margin trading.
The Jakarta Composite Index fell 2.6 percent as investors weighed falling corporate earnings and Australia’s warning that the execution of its nationals for drug trafficking will damage bilateral relations.