Emerging-market stocks fell, paring the benchmark index’s second straight weekly gain, as Chinese and European interest-rate cuts failed to bolster investor confidence and U.S. payrolls rose less than forecast.
The MSCI Emerging Markets Index (MXEF) lost 1 percent to 946.01 by the close in New York, trimming its weekly advance to 0.9 percent. Samsung Electronics (005930), the world’s largest maker of televisions and mobile phones, slumped after quarterly sales missed estimates. Brazil’s Bovespa snapped a five-day advance with B2W Cia. Global do Varejo falling 6.2 percent in Sao Paulo. The Micex Index dropped the most in a week as oil slid.
The People’s Bank of China announced yesterday its second reduction in borrowing costs in a month and the European Central Bank lowered its benchmark rate to a record low 0.75 percent. U.S. payrolls rose 80,000 last month after a 77,000 increase in May, Labor Department figures showed today in Washington. Economists projected a 100,000 gain, according to the median estimate in a Bloomberg News survey. Private employment increased 84,000 in June, the weakest in 10 months.
“The rate cuts by the Chinese central bank and the ECB failed to spark any optimism and led to profit taking yesterday,” Slava Smolyaninov and Leonid Slipchenko, analysts at UralSib Capital in Moscow, wrote in an e-mail to clients. “Investors clearly need to have greater confidence if they are to continue buying equities after the emergence of the latest signs of a slowdown.”
The MSCI Emerging Market gauge has added 3.2 percent in 2012 and trades at a multiple of 10.2 times estimated earnings, compared with 12.2 for the MSCI World Index, according to data compiled by Bloomberg, The index of developed nations has added 4 percent this year.
Unemployment in the U.S. held at 8.2 percent, matching the Bloomberg survey median. June concluded the worst quarter for corporate hiring since the first three months of 2010.
The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM:US) tracking developing-nation shares, sank 1.8 percent to $38.77.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, rose 2.4 percent to 26.90.
Brazil’s Bovespa dropped 1.7 percent, paring its weekly advance to 1.9 percent, its first five-day advance in three weeks.
Russia’s Micex Index tumbled 1.5 percent, its biggest decline since June 28, to pare its weekly advance to 3 percent. OAO Novatek, the nation’s largest non-state producer of natural- gas, slid 3.9 percent.
OAO Sberbank, the nation’s largest lender, fell 1.9 percent as its operating expenses in the first six months of this year rose 22 percent from a year earlier.
Oil for August delivery fell $2.77, or 3.2 percent, to $84.45 a barrel on the New York Mercantile Exchange. Crude is down 15 percent this year and 0.6 percent this week.
The BSE India Sensitive Index (SENSEX) dropped 0.1 percent.
The FTSE/JSE Africa All Share Index (JALSH) was little changed in Johannesburg. SABMiller Ltd. (SAB), the world’s second-largest brewer, added 1.9 percent.
The ISE National 100 Index (XU100) gained 1.3 percent in Istanbul.
Samsung Electronics dropped 2 percent in Seoul after the company’s second-quarter sales of 47 trillion won ($41.3 billion) trailed the 49.8 trillion-won average of 35 analysts’ estimates compiled by Bloomberg, overshadowing record operating profit.
South Korea’s Kospi Index fell 0.9 percent.
A gauge of developers in the Shanghai index surged 3.5 percent, the most since March 2. Poly Real Estate Group Co. (600048), the second-largest listed developer, surged 5 percent to the highest level in 2 1/2 years. Investors and speculators will increasingly re-enter the property market after the rate cut and housing prices will rise over the next few months, Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG, wrote in a note to clients yesterday.
The Hang Seng China Enterprises Index (HSCEI) of Chinese companies listed in Hong Kong lost 0.2 percent. China Construction Bank Corp. (939) dropped 2.7 percent as Citigroup Inc. said the nation’s interest-rate cut will hurt lenders’ earnings.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose four basis points, or 0.04 percentage point, to 369, according to JPMorgan Chase & Co.’s EMBI Global Index.
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