Emerging Stocks Drop as Petrobras Slumps With CommoditiesJulia Leite, Maria Levitov and Ian Sayson
Emerging-market stocks retreated to a one-week low as a decline in commodities sank producers from Petroleo Brasileiro SA to OAO Mechel. Indonesia’s rupiah weakened to the lowest level since November 2009.
The MSCI Emerging Markets Index fell 0.6 percent to 1,010.56, the lowest since Sept. 18. Brazil’s Petrobras paced losses in energy shares, while Mechel, Russia’s biggest producer of coal for steelmakers, sank 2 percent. China’s stocks slid, led by the biggest drop in financial companies in two months, on concern the government may encourage more competition among banks and expand property taxes. The rupiah slipped on speculation local companies boosted dollar purchases.
Commodity companies posted the biggest declines among 10 industries in the measure for developing-nation stocks. West Texas Intermediate crude tumbled to the lowest level in eight weeks on speculation that U.S.-Iranian relations are thawing and as the threat of an American military strike on Syria recedes. Gold, copper and silver also retreated.
“It’s a cliche, but it’s true: the market hates uncertainty,” Lawrence Creatura, a Rochester, New York-based fund manager at Federated Investors Inc., which oversees about $364 billion, said by phone. “Resolution of the Syrian uncertainty, via political discourse or military action would likely be positive for the markets.”
The measure for emerging markets has risen 8.7 percent in September, set for the best month since January 2012. The gauge trades at 10.6 times projected earnings, compared with the valuation of 14 for the MSCI World Index, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets Index exchange-traded fund slipped 0.8 percent to $41.87. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slumped 3.2 percent to 22.36.
Investors also watched U.S. economic data for clues on whether the Federal Reserve will trim its bond-buying program. Confidence among American consumers fell in September to a four-month low, while home prices in 20 U.S. cities rose in the 12 months through July by the most in more than seven years.
Brazil’s Ibovespa fell for the third time in four days as commodity producers from Petrobras to Vale SA sank. Wireless carrier Tim Participacoes SA jumped 9.6 percent after Madrid-based Telefonica SA agreed to pay $596 million to boost its stake in the controlling group of parent Telecom Italia SpA.
Russian stocks fell for a third day as crude oil, the nation’s chief export earner, retreated. Mechel fell to the lowest level since Sept. 6, while OAO Gazprom, the natural-gas export monopoly, retreated 0.9 percent.
The Turkish lira slumped after central bank Governor Erdem Basci said policy makers will only increase interest rates if they see two-year inflation expectations worsening.
The Shanghai Composite Index slid as Ping An Bank Co. paced losses in lenders. China Vanke Co. and Poly Real Estate Group Co. dropped at least 3 percent as the China Securities Journal reported the government may accelerate a property-tax trial.
India’s S&P BSE Sensex added 0.1 percent as Larsen & Toubro Ltd. drove a measure of capital goods producers to its first advance in three days. State Bank of India sank after Moody’s Investors Service cut its credit rating. The rupee fell for a third day, the longest losing streak in almost a month.
The rupiah dropped 0.4 percent to 11,488 per dollar as of 3:50 p.m. in Jakarta, after reaching 11,586 earlier, the weakest level since April 2, 2009, prices from local banks show.
The premium investors demand to own emerging-market debt over U.S. Treasuries rose six basis points, or 0.06 percentage point, to 325 basis points, according to JPMorgan Chase & Co.