Emerging Stocks Rally With Currencies as Metals Advance

By Stephen Kirkland & Pratish Narayanan - Aug 23, 2013 5:48 AM PT

Emerging-market stocks rose for the first time in seven days and currencies from India’s rupee to Brazil’s real advanced. European stocks and U.S. equity-index futures were little changed.

The MSCI Emerging Markets Index climbed 1 percent to 931.11 at 8:40 a.m. in New York, trimming this week’s decline to 2.8 percent. The Stoxx Europe 600 Index increased 0.2 percent and Standard & Poor’s 500 Index futures added less than 0.1 percent, erasing earlier losses. The rupee jumped the most in more than a year, the real had its biggest gain in a month and Indonesia’s rupiah rallied from a four-year low. The yen weakened on speculation Bank of Japan Governor Haruhiko Kuroda will reiterate the case for monetary easing at the Federal Reserve’s annual conference in Jackson Hole, Wyoming. Copper advanced 0.4 percent.

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A pedestrian looks at an electronic stock board outside a securities firm in Tokyo. The Topix reduced its weekly drop to 0.4 percent, the second decline in August. Photographer: Tomohiro Ohsumi/Bloomberg

7:45

Aug. 23 (Bloomberg) -- Simon Derrick, chief currency strategist at Bank of New York Mellon Corp., discusses the Federal Reserve's annual monetary conference in Jackson Hole, Wyoming, Brazil's $60 billion intervention program to stem declines in the real and the Greek debt crisis. He speaks with Mark Barton and Anna Edwards on Bloomberg Television's "Countdown." (Source: Bloomberg)

6:39

Aug. 21 (Bloomberg) -- Manpreet Gill, senior investment strategist at Standard Chartered Bank in Singapore, talks about the outlook for global markets, and his investment strategy. He also discusses the impact of Federal Reserve monetary policy on Asia with John Dawson on Bloomberg Television's "On the Move." (Source: Bloomberg)

12:06

Aug. 23 (Bloomberg) -- European Central Bank Governing Council Member Ewald Nowotny talks about the recent "stream of good news" from the euro-area economy and the outlook for interest rates. He spoke yesterday with Bloomberg Television's Mike McKee in Jackson Hole, Wyoming. (Source: Bloomberg)

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India’s rupee is headed for the biggest depreciation among emerging-market currencies this week, losing 4.6 percent against the dollar as speculation the Fed will taper stimulus raises the prospect of declining fund flows into emerging markets. Photographer: Dhiraj Singh/Bloomberg

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Indonesia’s Jakarta Composite Index is leading declines among Asian developing markets this week, losing 8.7 percent after worse-than-estimated economic data and a report showing the current-account deficit widened to a record in the second quarter. Photographer: Dimas Ardian/Bloomberg

Fed Bank of Dallas President Richard Fisher said yesterday the U.S. economy is strong enough to slow the pace of stimulus, while European Central Bank Governing Council member Ewald Nowotny said good economic news removed the need for further interest-rate cuts. Countries from India to Indonesia signaled they will take steps to support financial markets and Brazil announced a $60 billion intervention program involving currency swaps and loans.

“Emerging markets should remain very volatile for the remainder of this year as governments try to restore investor confidence and stem capital outflows,” Vana Bulbon, chief executive officer at UOB Asset Management (Thailand) Co. Ltd., which manages about $6.4 billion, said in Bangkok. “The global outlook has been improving led by growth in the U.S, while economies in Europe and China have bottomed out.”

Worst Week

The MSCI gauge of shares from 21 developing countries rebounded as its worst week in two months drove shares to a six-week low. About $1.5 trillion has been erased from the value of emerging-market equities since Fed Chairman Ben S. Bernanke said on May 22 policy makers could scale back bond buying.

Benchmark equity gauges in India and South Korea gained more than 1 percent. The rupee jumped 2.1 percent against the dollar, the real gained 1.8 percent and the rupiah climbed 0.4 percent. The Thai baht and the Malaysian ringgit both strengthened 0.3 percent, rebounding from three-year lows.

The Stoxx 600 has fallen 0.7 percent this week, the most since June. A gauge of basic resources stocks led gains today, advancing 0.6 percent.

Afren Plc slipped 4.5 percent after the oil explorer reported that its profit after tax decreased 39 percent to $62 million in the first half.

Home Sales

U.S. futures were little changed before a report that may showsales of new houses in the world’s largest economy fell last month. The Commerce Department release, due at 10 a.m. in Washington, will show that Americans bought 487,000 new residential properties at an annual rate in July, compared with 497,000 in June, according to the median estimate of economists surveyed by Bloomberg.

Japan’s currency weakened 0.2 percent to 98.95 per dollar and 0.2 percent per euro. The 17-nation common currency was little changed at $1.3358. South Africa’s rand rose against all of its 16 major peers, climbing most against the Canadian dollar.

The yield on 10-year German bunds rose five basis points to 1.97 percent. The 10-year Treasury yield rose two basis points to 2.90 percent, up seven basis points in the week.

The cost of insuring against losses on corporate bonds fell, with the Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies decreasing 1.3 basis point to 101.4 basis points, the lowest since Aug. 16.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Pratish Narayanan in Singapore at pnarayanan9@bloomberg.net;

To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net