Emerging Stocks Decline as Fed Interest-Rate Move Odds Increase
- Developing currency index tumbles, erasing an earlier advance
- The Fed is preparing ground for rate increase, analyst says
Emerging-market stocks fell to a one-week low and currencies weakened after the Federal Reserve said the U.S. economy continues to expand at a “moderate” pace, bolstering speculation that policy makers may increase benchmark borrowing costs this year.
The MSCI Emerging Markets Index declined to 0.3 percent to 860.30 and a gauge of 20 currencies reversed a gain to fall 0.1 percent in New York after the U.S. central bank made its statement following its decision to keep U.S. borrowing costs unchanged. The odds of a December increase increased to 48 percent, from 35 percent on Tuesday, Fed futures trading indicates. Demand for developing-nation stocks, bonds and currencies has been buoyed by the Fed’s near-zero interest rates as investors seek higher returns among riskier assets.