Thursday, 10 February 2011

Emerging markets lead global stocks down

Global stocks finally retreated on Wednesday. Bloomberg reports:

Stocks fell, sending emerging markets down for a fifth day, amid concern accelerating inflation will push up borrowing costs. Corn, wheat and soybeans rose to the highest prices since 2008, while the dollar slid and Treasuries rebounded.

The MSCI Emerging Markets Index lost 1.5 percent at 4 p.m. in New York to extend its longest slump since November. The Standard & Poor’s 500 Index decreased 0.3 percent in a retreat from its highest close in 2 1/2 years, while European shares extended losses as Ireland said it will postpone planned capital injections into banks. Wheat jumped as much as 2.2 percent, and corn added 4 percent. The Dollar Index lost 0.5 percent and 10- year Treasury yields fell from the highest level since May.

One index that did hold on to gains though was the Dow.

Walt Disney Co. rallied 5.3 percent after sales topped estimates and lead the Dow Jones Industrial Average higher for an eighth straight day, its longest rally since March. The 30- stock Dow climbed 6.74 points, or 0.1 percent, to 12,239.89, its highest close since June 16, 2008.

The ability of the Dow and the S&P to close near 2½ year highs illustrate how much developed and emerging markets have been on divergent paths so far this year.

The MSCI Emerging Markets Index has declined 3.6 percent this year, compared with a 4.9 percent rally in the MSCI gauge for developed countries, as central banks from China to India and Brazil raised borrowing costs...

Joe Weisenthal also notes that stocks finally fall. But if you're still interested in investing in emerging markets despite their recent underperformance, he also has a chart showing some of their P/E multiples.

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