Emerging-market stocks fell and currencies declined for a sixth day as concern grew the U.S. will raise interest rates. Polish shares dropped after an opposition candidate won the presidential election.
Banks led the biggest equity decline in four months in Warsaw after the vote set up a showdown for a fall election that may unseat one of Europe’s most economically successful governments. ITC Ltd., India’s biggest tobacco company, fell 3.8 percent after its profit trailed estimates. Chinese shares jumped to a seven-year high. Malaysia’s ringgit led currencies lower.
The MSCI Emerging Markets Index dropped 0.2 percent to 1,035.33 at the close of trading in New York. A Bloomberg gauge of currencies weakened to a one-month low. Fed Chair Janet Yellen said Friday that she expects to raise borrowing costs this year after a report showed core inflation was higher than forecast. South Korea, Hong Kong, the U.S. and U.K. were among countries where trading was closed for public holidays.
“Yellen’s comments confirm that there will be in most likely case an interest rate hike near September,” Hertta Alava, the head of emerging markets at FIM Asset Management Ltd., said by phone from Helsinki. “That is pressuring emerging-market currencies.”
The real depreciated 0.2 percent against the dollar, while the ringgit and South Korea’s won slid 0.8 percent.
The WIG 20 Index fell 1.7 percent as PKO Bank Polski SA retreated 4.6 percent. Benchmark gauges in Turkey, India, Thailand and Malaysia also decreased at least 1 percent.
Poland’s zloty was little changed against the euro after earlier weakening to a two-month low. The currency has declined 1.4 percent since opposition candidate Andrzej Duda won the first-round vote on May 10, the worst performance in emerging Europe after Hungary’s forint. Bonds fell, sending the yield on 10-year securities up 12 basis points to 2.9 percent.
Duda vowed to pursue an “active” presidency, with plans to raise the level of non-taxable income and introduce additional tax benefits for families. He also criticized the banking industry for charging “too much” and for burdening Poles with foreign-currency mortgages, pledging to boost taxes.
The ruble weakened for a fifth day, erasing an earlier advance as Russian government and central bank efforts to stem the currency’s gain damped its carry-trade appeal.
The MSCI Emerging Markets Index has climbed 7.9 percent this year and trades at 12.3 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has risen 5.4 percent in 2015 and is valued at a multiple of 16.9.
All 10 industry groups fell in the emerging-market index, led by energy producers and utilities. OAO Gazprom, Russia’s natural gas producer, slid 1.4 percent and Malaysia’s electric utility Tenaga Nasional Bhd. sank 3.4 percent. India’s Tata Power Co. lost 1.5 percent after the BSE Ltd. said it will remove the company from the S&P BSE Sensex starting June 22.
The Shanghai Composite Index rallied 3.4 percent to the highest close since January 2008. China’s CSI 300 Index, representing the largest stocks in Shanghai and Shenzhen, jumped 3 percent amid speculation the government will accelerate measures to bolster the economy and cross-border sales of mutual funds will fuel equity inflows.
Brazil’s Ibovespa erased earlier losses as Vale SA, the world’s largest iron-ore producer, rallied with the commodity, and as banks rebounded from a week of losses.