Stocks in developed countries are rising the most since 1998 while emerging markets slump, a sign the United States is returning to its role as the engine of world growth aided by a recovery in Europe.
Bloomberg reports the MSCI World Index of equities in 24 countries rose 6.1% for 2011 through Monday, the best annual start in 13 years, and the MSCI Emerging Markets Index of shares in nations such as Brazil, Russia, India and China lost 2.7%. A Morgan Stanley gauge of stocks such as Archer Daniels Midland Co. and Deere & Co. meant to rally when inflation expectations match Federal Reserve targets added 46% since August, almost double the Standard & Poor’s 500 Index.
The news service notes that while emerging-market equities beat developed countries every year except 2008 in the past decade, they’re falling now as Brazil, Russia, India and China battle inflation. Thornburg Investment Management Inc. expects bigger gains from developed-market equities after German Chancellor Angela Merkel and French President Nicolas Sarkozy pledged to prevent the breakup of the euro and the Fed began buying $600 billion in Treasuries to spur growth.