Emerging-Market Stocks Rise as Oil Gains, China Pledges Growth
Emerging-market stocks rebounded from a five-month low as higher oil and China’s pledge to look at policies favoring growth boosted shares of energy and material companies.
The MSCI Emerging Markets Index climbed 0.6 percent to 902.09 at the close in New York. Russian oil producers OAO Surgutneftegas and OAO Tatneft added more than 4.5 percent to lift the Micex Index by the most in three months. Brazil’s Bovespa fell 1 percent as clothing retailer B2W Companhia Global do Varejo slipped to a record low. Indian stocks rallied in Asia as Oil & Natural Gas Corp. surged the most since 2010.
Oil gained 76 cents to settle at $90.66 a barrel, rising from a seven-month low, on the New York Mercantile Exchange. It’s the fourth time prices have risen this month. China’s leaders pledged to intensify “fine-tuning” of policies in the second government statement in four days, signaling a commitment to growth as domestic demand slows and Europe’s debt crisis escalates.
“It’s an opportunity” after the recent drop in developing-nation stocks, Geoffrey Dennis, global emerging-market strategist at Citigroup Inc. in New York, said in an interview on Bloomberg Television. “The market will go higher in the long term because the Chinese economy will get a lot better in the second half with policy easing.”
The number of Americans filing first-time claims for unemployment insurance payments was little changed last week, adding to evidence the labor market recovery may have paused, Labor Department data showed today.
Consumer confidence in the U.S. improved last week for the first time in a month. The Bloomberg Consumer Comfort Index (COMFCOMF) was minus 42 in the seven days ended May 20 after an almost four-month low of minus 43.6 in the prior period.
The MSCI Emerging Markets Index, down 1.6 percent this year, trades at 9.7 times estimated earnings, compared with 11.7 for the MSCI World Index of advanced nations, which has added 0.8 percent in 2012.
The developing-nation gauge’s 14-day relative strength index, which tracks momentum by comparing closing prices with daily trading ranges, was at 22.4 today, the 12th day below 30. A reading of 30 or below is a signal some investors use to indicate prices may be about to rise.
Russia’s benchmark gauge rallied 2.2 percent, the most since Feb. 24 after it fell 3.4 percent to the lowest level since July 2010 yesterday. OAO Taftneft climbed 5.8 percent to lead advances in the index. Surgutneftegas jumped 4.6 percent.
B2W Varejo retreated 6.1 percent to lead declines on Brazil’s Bovespa, which declined 1 percent in Sao Paulo. Shares of B2W fell to 6 reais, the lowest level since the company went public in 2005. MMX Mineracao & Metalicos SA, an iron-ore producer, slipped 3 percent.
South Africa’s FTSE/JSE Africa All Share Index (JALSH) jumped 0.5 percent, recovering from its biggest sell-off in seven weeks. AngloGold Ashanti Ltd. (ANG), the country’s biggest producer of the metal, rose 3.7 percent.
Hungary’s BUX Index (BUX) jumped 0.6 percent after its biggest fall in more than six months. OTP Bank Nyrt., the country’s largest lender, rose 1.1 percent. The Czech Republic’s PX index added 0.1 percent while Turkey’s ISE National 100 Index slid 1.5 percent.
The Shanghai Composite Index (SHCOMP) dropped 0.5 percent after a private survey showed the nation’s manufacturing may shrink for a seventh month. The 48.7 preliminary reading for a purchasing managers’ index released by HSBC Holdings Plc and Markit Economics today compares with a final 49.3 for April.
Indian stocks rallied the most in Asia amid speculation the government will take more steps to curb the region’s worst current-account deficit after allowing the first increase in gasoline prices in almost seven months. Oil & Natural Gas added 5.9 percent.
The BSE India Sensitive Index gained 1.7 percent, the steepest climb since March 30.
Finance Minister Pranab Mukherjee has pledged to restrict the subsidy program that spans diesel to fertilizers to less than 2 percent of gross domestic product this fiscal year as he tackles a shortfall in government finances. Standard & Poor’s last month lowered the nation’s rating outlook to negative from stable, citing slowing economic growth and a widening deficit.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries declined eight basis points, or 0.08 percentage point, to 400, according to JPMorgan Chase & Co.’s EMBI Global Index.