Emerging-Market Stocks Decline on U.S. Data as Petrobras TumblesNatasha Doff and Ksenia Galouchko
Emerging-market stocks fell, trimming a weekly gain, after data showing payrolls in the U.S. rose more than forecast spurred speculation that the Federal Reserve will increase borrowing costs.
The Ibovespa slumped after Brazilian President Dilma Rousseff chose a state-bank executive for the helm of oil producer Petroleo Brasileiro SA. Chinese stocks posted the longest weekly slide since May. Russia’s Micex Index jumped 3.5 percent, leading global advances, as German Chancellor Angela Merkel and French President Francois Hollande held talks in Moscow to stave off a deeper crisis in Ukraine.
The MSCI Emerging Markets Index decreased 0.4 percent to 978.57. The gauge rose 1.8 percent in the week as a rebound in oil prices supported exporters of the commodity. Sustained job growth in the U.S. will probably help assure Federal Reserve policy makers that the expansion is well-rooted and can withstand an increase in interest rates later this year.
“The whiff of a June rate hike is in the air,” Nicholas Spiro, a managing director at Spiro Sovereign Strategy, said by e-mail from London. “The stronger the employment growth, the greater the pressure on wages and the more likely it becomes that the Fed starts to tighten policy in June, putting further strain on EM assets.”
A gauge tracking emerging-market currencies fell 0.7 percent as Brazil’s real depreciated 1.3 percent versus the dollar. The Bloomberg Dollar Spot index rose 1 percent.
Petrobras fell 6.9 percent, extending its 12-month plunge to 36 percent. Banco do Brasil SA’s head Aldemir Bendine will replace Maria das Gracas Foster as the chief executive officer of the oil company amid the largest-ever graft scandal in Brazil’s history.
The Shanghai Composite Index lost 1.9 percent, bringing the five-day drop to 4.2 percent. Gauges of Chinese manufacturing and services this week signaled a slowdown in the region’s biggest market.
Developing-nation shares have gained 2.3 percent this year and trade at 11.6 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has risen 0.6 percent in 2015 and is valued at a multiple of 16.2.
Russia’s dollar-denominated RTS Index soared to this year’s high and the Micex Index closed at the strongest level since April 2011. Energy and consumer shares led the advance in Moscow, with Lukoil adding 4.1 percent.
The premium investors demand to hold emerging-market debt over U.S. Treasuries narrowed 12 basis points to 364, according to JPMorgan Chase & Co. indexes.