Most emerging market stocks and currencies dipped on Thursday on concerns that the Iran war could escalate, sending oil prices soaring over 7%, while investors assessed the impact of a hawkish stance by the U.S. Federal Reserve.
Trump is slated to receive a briefing on plans for a series of fresh military strikes on Iran in hopes it will return to negotiations, according to an Axios report late on Wednesday, sending Brent crude prices to a fresh four-year high.
Since its outset, the Iran war has battered global markets and raised concerns about inflation, as shipping disruptions in the crucial region have kept oil prices elevated.
MSCI's indexes tracking global EM currencies, opens new tab and stocks, opens new tab dipped 0.2% and 1.2% respectively, but were set for robust monthly gains.
The stocks gauge is set for its biggest monthly jump since November 2022, as risk appetite improved this month after the U.S. and Iran announced a temporary ceasefire, which was later extended even as negotiations stalled.
"With no sign of any peace talks and fears mounting about an escalation, oil prices have continued their gains of recent days... investors are pricing in a more protracted conflict," said analysts at Deutsche Bank.
Most stock indexes were lower on the day, including Asian ones that have seen robust gains on the back of euphoria around AI. Bourses in South Korea (.KS11), opens new tab and Taiwan (.TWII), opens new tab marked their best month in decades.
Stocks in Romania (.BETI), opens new tab were flat and Hungarian ones gained 1%, while Polish equities (.WIG20), opens new tab slipped 0.6%. Turkish equities (.XU100), opens new tab were up 0.4%.
However, South African stocks (.JTOPI), opens new tab gained 0.7%, as gold prices rose over 1%. The bullion is one of the country's top exports.
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