Bloomberg News

Emerging Stocks Decline After U.S. Jobs Growth Lags Forecasts

July 08, 2011

July 8 (Bloomberg) -- Emerging-market stocks fell after a lower-than-forecast increase in U.S. jobs dimmed the outlook for global growth.

The MSCI Emerging Markets Index slid 0.3 percent to 1,163.93 at 4:30 p.m. New York time, trimming this week’s gain to 0.6 percent. India’s Sensex index fell the most in about three weeks as metal and mining companies sank. Russia’s benchmark index declined 0.9 percent. Brazil’s Bovespa index dropped 1.1 percent, posting the biggest weekly loss since January.

The benchmark developing-nation equity index earlier advanced as much as 0.5 percent, then dropped after Labor Department figures showed U.S. employers added 18,000 workers in June, less than the median forecast of 105,000 among economists, while the unemployment rate unexpectedly climbed to 9.2 percent, indicating a struggling labor market.

The job number “has immediately arrested the forward momentum of risk assets,” said Michael Roche, an emerging- market strategist at MF Global in New York. “It takes away some strength of a building sentiment toward a constructive second half of the year.”

The MSCI Emerging Markets Index has risen 1 percent this year, compared with a 4.9 percent advance in the MSCI World Index of developed-country stocks.

Crude oil dropped, falling 2.5 percent in New York on waning optimism for the economic rebound and fuel demand growth. Copper fell the most in almost two weeks and aluminum, lead and nickel also fell in London.

Hungary, Poland

Hungary’s forint weakened 1.3 percent versus the dollar and the polish zloty fell 1.1 percent, the worst performers among major emerging-market currencies.

Poland’s WIG20 Index fell 0.9 percent, led by PKO Bank Polski SA, the nation’s biggest lender. Bank Pekao SA retreated 1.5 percent after trading of its parent UniCredit SpA was halted in Milan.

European regulators are seeking to assuage investor concern that banks in the region are inadequately capitalized with a second round of stress tests. Lenders will be made to disclose capital levels, estimates for profitability in 2011 and 2012 as well as their holdings of sovereign debt in the July 15 tests, the London-based European Banking Authority said in a statement today.

In Brazil, oil producer Petroleo Brasileiro SA and miner Vale SA followed crude and metal prices lower. Argentina’s Merval index fell for the first time in 10 days. Tenaris SA, the world’s largest producer of seamless steel pipes used in the petroleum industry, was among decliners dragging down the measure.

Emerging markets received $1.4 billion out of the total $6.2 billion net inflows into global stock funds in the week ended July 6, according to a report by EPFR Global today.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries jumped 11 basis points, or 0.11 percentage point, to 300 basis points, according to JPMorgan’s EMBI Global Index.

--Editor: Marie-France Han

To contact the reporters on this story: Belinda Cao in New York at

To contact the editor responsible for this story: David Papadopoulos at

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