Bloomberg News

Emerging-Market Stocks Post Third Weekly Rise on U.S. Jobs Gain

August 03, 2012

Emerging-market stocks rose, sending the benchmark index (VXEEM) to a third week of gains, after payrolls in the U.S. climbed more than forecast, signaling a recovery in the world’s largest economy’s labor market.

The MSCI Emerging Markets Index (MXEF) added 0.8 percent to 952.79, pushing the weekly advance to 1.2 percent. Brazil’s Bovespa stock index climbed to a 12-week high as homebuilder Gafisa SA surged the most in two months. Electricity generator E.ON Russia led gains on the Micex index. The Shanghai Composite Index (SHCOMP) increased the most in five weeks as regulators cut transaction fees on equities trading.

Equities rose as payrolls increased 163,000 following a revised 64,000 rise in June that was less than initially reported, Labor Department figures showed today in Washington. The median estimate of 89 economists surveyed by Bloomberg News called for a gain of 100,000. Unemployment rose to 8.3 percent. The MSCI Emerging Markets Index declined for the first time in six days yesterday on concern policy makers around the world won’t take additional steps to boost their economies.

“Today’s data is comforting to build a more positive mood as it’s a message on global growth,” Gaelle Blanchard, an emerging-markets strategist at Societe Generale SA, said by phone from London. “At the end of the day people are expecting something to happen from central banks, at least from the ECB.”

The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM:US) tracking developing-nation shares, climbed 3.1 percent to $39.93, the highest level since May 11. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, declined the most since November, falling 12 percent to 23.90.

Brazilian Stocks Surge

Oil surged the most in a month and commodities jumped after the U.S. payrolls data bolstered optimism about economic strength in the world’s biggest crude-consuming country.

The Bovespa climbed 3.1 percent in Sao Paulo, with Gafisa climbing 14 percent.

Turkish bond yields retreated to the lowest in more than 1 1/2 years, while the lira jumped 1.3 percent against the dollar after the central bank raised the amount of daily funding for a second day.

E.ON Russia gained 4.4 percent to the highest since April 28.

European Central Bank President Mario Draghi yesterday postponed action by demanding euro-zone governments turn to existing rescue funds before the ECB intervenes. Draghi said on July 26 the central bank would do “whatever it takes” to preserve the euro.

Foxconn Slumps

China’s government will conduct policy fine-tuning at an appropriate time and consumer inflation may rebound after August, the People’s Bank of China said in a quarterly monetary- policy report on its website yesterday.

South Korea’s Kospi index slid 1.1 percent, leading declines among Asian emerging-market gauges. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong slipped 0.1 percent. The BSE India Sensitive Index declined 0.2 percent.

Foxconn Technology Co. and Hon Hai Precision Industry Co. (2317), which announced in March plans to buy shares in Sharp Corp., tumbled after the Japanese consumer-electronics maker widened its loss forecast. Hon Hai said it plans to renegotiate the price.

Foxconn sank 7 percent in Taipei, the steepest drop since Aug. 22, while Hon Hai Precision slipped 3.8 percent. Sharp plunged 28 percent in Tokyo after the maker of Aquos TV models forecast an annual loss of 250 billion yen ($3.2 billion).

Chimei Innolux Corp. (3481), Taiwan’s largest maker of liquid- crystal displays, tumbled 6.8 percent in Taipei. Deutsche Bank AG cut its share-price estimate by 27 percent to reflect lower- than-normal LCD demand. AU Optronics Corp. slumped to a record low.

To contact the reporters on this story: Chris Kay in London at ckay5@bloomberg.net; Sridhar Natarajan in New York at snatarajan15@bloomberg.net

To contact the editors responsible for this story: Tal Barak Harif at tbarak@bloomberg.net; Gavin Serkin at gserkin@bloomberg.net


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Companies Mentioned

  • EEM
    (iShares MSCI Emerging Markets ETF)
    • $43.46 USD
    • -0.33
    • -0.76%
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