The exchange-traded fund tracking developing-nation shares fell the most in two weeks as manufacturing from China to the U.S. and Australia slowed, sparking concern that the global economic recovery is faltering.
The iShares MSCI Emerging Markets Index dropped 1.2 percent to $42.76 at 2:06 p.m. in New York, after surging 2.5 percent in two days. The MSCI Emerging Markets Index lost 0.1 percent to 1,038.10. Stock exchanges in Latin America and most European markets were closed for a holiday. The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. slid 1.2 percent to 91.95, while the Standard & Poor’s 500 Index fell 0.7 percent after rising to a record yesterday.
“The economic data has been weak across the board,” Peter Jankovskis, who helps oversee $3 billion as co-chief investment officer of Lisle, Illinois-based Oakbrook Investments LLC, said by phone. The figures are “consistent with a slower growth horizon for the world, which would have negative implications for many emerging markets,” he said.
The ETF of developing nations followed American stocks lower as data showed that manufacturing in the U.S. expanded in April at the slowest pace in four months. The Institute for Supply Management’s factory index fell to 50.7 from the prior month’s 51.3. The median forecast of 84 economists surveyed by Bloomberg was 50.5. A reading of 50 is the dividing line between expansion and contraction.
The Federal Reserve will maintain its bond buying at a pace of $85 billion a month and is prepared to raise or lower the level of purchases as economic conditions evolve, the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington.
China, Australia
China’s manufacturing grew at a weaker pace in April in a sign that the slowdown in the world’s second-largest economy is extending into the second quarter. The Purchasing Managers’ Index was at 50.6, compared with the 50.7 median forecast of 31 analysts in a Bloomberg News survey and a March reading of 50.9. The Australian Industry Group said its manufacturing index plunged 7.7 points to 36.7 last month, a four year low.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, jumped 13 percent to 20.85.
The Bank of New York Mellon Korea ADR Index, which tracks American depositary receipts of South Korean companies, lost 1.1 percent, snapping a two-day advance. The Bank of New York Mellon India ADR Index fell 1.1 percent.
Indonesian stocks gained a third day to a record on optimism over earnings growth at some banks. PT Bank Rakyat Indonesia, the country’s third largest lender by assets, provided the biggest boost to the Jakarta Composite Index, which gained 0.5 percent.