Risk on: Emerging market stocks grow

Emerging-market stocks rose, extending the biggest quarterly advance since September 2012, while shares in Europe and the U.S. were little changed. Oil (NYMEX:CLN14) fell as continuing violence in Iraq failed to disrupt supply.

The MSCI Emerging Markets Index climbed 0.4% at 9:30 a.m. in New York. The Stoxx Europe 600 Index slipped less than 0.1% and the Standard & Poor’s 500 Index (CME:SPU14) was little changed near a record, with the U.S. benchmark poised for the longest stretch of quarterly gains in 16 years. Bulgarian stocks rallied from a five-month low while Dubai shares extended a bear market. Brent crude (NYMEX:SCN14) declined as much as 0.7% in London. Portugal’s 10-year bond yield rose eight basis points to 3.65%.

A gauge of world equities is heading for a fifth straight monthly advance, the longest streak since 2007, amid signs of economic revival and speculation the U.S. won’t increase interest rates anytime soon. Pending home sales in America probably picked up in May, economists said before a report today. Sectarian fighting in Iraq hasn’t spread to the south, home to more than three-quarters of the nation’s oil production.

“The global outlook is improving,” Ang Kok Heng, chief investment officer of Phillip Capital Management Sdn., which manages $428 million, said by phone in Kuala Lumpur. “Low interest rates will still be the catalyst.”

The MSCI Emerging Markets Index has climbed 5.6% this quarter. India’s S&P BSE Sensex index advanced 1.3% today, jumping 14% this quarter as investor optimism over the new government lured overseas funds. The Shanghai Composite Index rose 0.6%, capping the first quarterly gain since the period ended in September. Manufacturing data tomorrow may add to signs the biggest emerging economy is stabilizing after a two-quarter slowdown.
 

EU Credit
 

Bulgaria’s Sofix index jumped 5.7%. The European Union gave Bulgaria authority to provide 3.3 billion levs ($2.3 billion) in state aid for lenders after authorities there arrested men they said had triggered a run on deposits of the third-largest bank.

Russia’s ruble slipped 0.7% and the Micex lost 0.7%. Moody’s Investors Service lowered its outlook on the country’s credit to negative, citing geopolitical risk and the outlook for economic growth.

The DFM General Index tumbled 4.4%, bringing its decline since a May 6 peak to 27%, as investors sold shares in companies linked to Dubai’s real-estate industry. Trading was lower in the region as the holy month of Ramadan began this week. Volumes on the Bloomberg GCC 200 Index were 36% below the 30-day average, according to data compiled by Bloomberg.
 

Argentina Payment
 

Argentina is poised to miss a bond payment today, putting the country on the brink of its second default in 13 years, after a U.S. court blocked the cash from being distributed until the government settles with creditors from the previous debt debacle.

The country has a 30-day grace period after missing the $539 million debt payment to seek an accord with a group of defaulted bondholders led by billionaire Paul Singer’s NML Capital Ltd. and prevent a default on its $28.7 billion of performing global dollar bonds. Both Argentina and NML have said that they’re open to talks.

Ten of the 19 industry groups in the Stoxx 600 declined today, with trading volumes 5.2% higher than the 30-day average, data compiled by Bloomberg show.

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