Energy companies lead emerging stocks lower

Emerging-market stocks dropped for the first time in three days, led by energy companies, as Petroleo Brasileiro SA and China Petroleum & Chemical Corporation tumbled. Indonesia’s rupiah slid to the lowest level since 2009.

Bloomberg News reported that the MSCI Emerging Markets Index fell 0.5 per cent to 1,005.27 in New York. Petrobras drove Brazil’s Ibovespa to a 12-week low, while China Petroleum plunged after the government detained seven people for their role in a deadly pipeline explosion. Egyptian stocks declined the most in a month as political disputes threatened to delay the country’s transition to civilian rule. The rupiah sank after Indonesia missed its fundraising target at a domestic dollar debt sale.

A gauge of energy companies in the benchmark for developing-nation stocks posted the biggest slump in five months. West Texas Intermediate fluctuated amid forecasts that a report tomorrow will show that US crude supplies gained for a 10th week while stockpiles of distillate fuel, a category that includes heating oil and diesel, dropped. Prices slipped on Monday after Iran and world powers reached an interim agreement on November 24 to restrict the country’s nuclear program.

“The weakness in energy, whether it’s the result of trading after the Iran deal, fundamentals catching up or lack of demand, tends to put weakness on the entire commodity complex,” Walter “Bucky” Hellwig, who helps manage $17bn of assets at BB&T Wealth Management in Birmingham, Alabama, said by phone. “To the extent that reflects activity in the emerging-market area, that’s been a negative.”

Investors also watched US economic data for clues on when the Federal Reserve will start paring stimulus.

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