The MSCI Emerging Markets Index gained for a third day, heading for the highest close since December.
Developing nations face new risks and Russia’s takeover of Crimea last month injects geopolitical tension that’s “casting a pall” on the region, the International Monetary Fund said in a report today. The fund urged emerging markets to prepare for flows of capital back to advanced economies.
Stronger U.S. growth this year and next will help the world economy withstand weaker recoveries in emerging markets including Brazil and Russia, the IMF said.
Russian stocks reversed earlier losses, with the Micex Index adding 0.2 percent. Russian companies should consider delisting their shares from foreign stock exchanges and trade in Moscow to boost security amid the standoff over Ukraine, according to Deputy Prime Minister Igor Shuvalov.
“Companies and their boards of directors should consider the need for further trading of shares on foreign exchanges,” Shuvalov told reporters after a government meeting near Moscow today. “This is a question of economic security.”
The S&P 500(CME:ESM14) lost 1.1 percent yesterday, sending its three- day drop to 2.4 percent, the most since January. The Nasdaq 100 gauge of the biggest technology stocks fell 4.3 percent in the period, the most since 2011, while the Russell 2000 Index of small companies sank 1.5 percent to a two-month low yesterday.
The selloff comes as valuations in technology stocks have soared while the broader market has touched all-time highs. The Nasdaq 100 surged 257 percent from its low in March 2009 through a 13-year high on March 5. That beat the 177 percent increase for the S&P 500 in the period. The S&P 500 closed at a record on April 2.
Concern that the declines will worsen sent the Chicago Board Options Exchange Volatility Index for a 12 percent jump yesterday, the most since March 13. The gauge known as the VIX measures the cost of S&P 500 options and moves in opposite direction to the stocks index about 80 percent of the time. It retreated 1.5 percent today.
Alcoa rose 1.1 percent to $12.61. The largest U.S. aluminum producer will post first-quarter earnings after today’s market close. JPMorgan Chase & Co. and Wells Fargo & Co. are among S&P 500 companies reporting earnings this week.
Profit for members of the gauge probably climbed 1 percent in the first quarter, analysts now forecast, after anticipating a 6.6 percent rise in January. Sales rose 2.9 percent on average, according to analyst estimates compiled by Bloomberg.
European equities fell from a six-year high yesterday and five shares declined for every one that advanced in the Stoxx 600 index today. The gauge traded at 14 times estimated 12-month earnings, compared with an average multiple of 11.4 times over the past five years.
“Ukraine worries, coupled with stock valuations which are high, are taking their toll on European markets,” Stephane Ekolo, chief European strategist at Markit Securities in London, wrote in an e-mail. “We are seeing an aggravation in the situation in Ukraine with some eastern provinces trying to declare independence and turning towards Russia.”
West Texas Intermediate oil climbed 0.6 percent to $101.05 a barrel. Crude rebounded amid speculation that gasoline supplies dropped for a seventh week in the U.S., the world’s biggest oil consumer.
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