Emerging Stocks Decline on Fed Rate Outlook

Emerging-market stocks fell as the Federal Reserve’s interest-rate target increase spurred concern that investors will pull money out of developing nations’ assets and a decline in Chinese home prices damped the outlook for growth in the world’s second-largest economy.

The MSCI Emerging Markets Index slipped 0.6 percent to 1,056.37. The Borsa Istanbul 100 Index sank 1.9 percent. Russia’s ruble weakened for a second day. China Construction Bank Corp. (939) lost 1.4 percent, pacing a 0.9 percent retreat in Hong Kong-traded Chinese shares. Brazil’s real fell to a seven-month low and the Ibovespa dropped amid concern the weaker currency will fuel inflation.

Federal Reserve policy makers yesterday raised by 25 basis points their median estimate for where the federal funds rate will be by the end of 2015, while keeping a pledge to keep rates low for a “considerable time” after their bond purchase program has ended. Data today showed Chinese home prices decreased in 68 of 70 cities in August from July.

Bloomberg

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