Emerging-market stocks gained, ending a five-day slide, amid speculation the European Central Bank will act to lower Spain’s borrowing costs, curbing the impact of the continent’s debt crisis on global growth.
The MSCI Emerging Markets Index gained 0.1 percent to 1,016.85 at 12:57 p.m. in New York, led by materials producers. Russia’s Micex (INDEXCF) jumped 0.5 percent, as oil companies OAO Surgutneftegas and OAO Lukoil gained. The Bovespa (IBOV) advanced after plunging the most in five weeks yesterday in Sao Paulo.
ECB Executive Board Member Benoit Coeure triggered speculation the bank will revive its bond purchase program to lower Spain’s borrowing costs at an event in Paris today. Spanish “market conditions are not justified,” he said. Spanish Prime Minister Mariano Rajoy pledged today he’ll press ahead with measures to overhaul the economy and cut spending.
Coeure’s comments “cooled off the rising Spanish yields,” Tim Hall, who manages $700 million at Deltec Asset Management in New York, said by phone. “Any sign that these countries are buying some time and trying to implement the right policies, I think the market will react positively.”
Emerging-market stocks have gained 11 percent this year to trade for 10.5 times estimated profit. That’s cheaper than developed-country stocks on the MSCI World Index, which cost 12.3 times earnings estimates. The MSCI World has advanced 7.2 percent this year.
The IShares MSCI Emerging Markets Index (MXEF) exchange-traded fund (EEM:US), the most-traded ETF to track developing-nation shares, rose 1.4 percent to $41.88 in New York. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a gauge of options prices on the fund and expectations of price swings, fell 3.8 percent to 29.16.
The Bovespa gained 0.6 percent, rebounding from a two-day fall that erased 3.1 percent from the gauge. Banco do Brasil SA jumped 1.8 percent and Itau Unibanco Holding SA (ITUB4) added 1.4 percent.
Alfa SAB (ALFAA), Mexico’s largest publicly traded producer of petrochemicals and processed meats, gained 3.2 percent, leading the benchmark IPC index, after saying preliminary first-quarter sales increased 8.9 percent from a year earlier.
The PX index rose for the first time in seven days in Prague, as Erste Group Bank AG (RBAG) jumped 5.1 percent. Turkey’s ISE National 100 Index (XU100) gained 1.2 percent, advancing for the first day in six.
The Hang Seng China Enterprises Index (HSCEI) of mainland stocks in Hong Kong lost 0.9 percent.
Thai stocks slumped as northwestern Indonesia was hit by an earthquake that prompted tsunami warnings across parts of Asia. The warnings were later canceled. Thailand’s SET Index (SET) fell 1 percent, while Indonesia’s Jakarta Composite (JCI) slid 0.5 percent. The quake came shortly before the close of trading in Jakarta.
South Korean markets were closed for election day. The IShares MSCI South Korean Index Fund (EWY:US), a U.S. exchange-traded fund that holds stocks from South Korea, gained 1.3 percent. The Bank of New York Mellon Korea ADR Index of American depositary receipts from the country advanced 1.2 percent.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries declined nine basis points, or 0.09 percentage point, to 358, according to JPMorgan Chase & Co.’s EMBI Global Index.
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