Emerging markets achieve their best daily performance in four years... Index rises 5.1%

The MSCI Emerging Markets Index rose 5.1% to its highest level in a month, heading for its biggest daily gain since November 2022, when the US Federal Reserve hinted at a slower pace of interest rate hikes.

Gains wave

This rise came after the index fell by about 13% during the past month, while Asian and European markets, which depend on energy imports, led the wave of gains, benefiting from the sharp drop in oil prices.

US President Donald Trump announced this morning that a truce had been reached, just hours before the deadline he had given Tehran to reopen the shipping lane, or else it would face what he described as "the obliteration of an entire civilization.".

Pakistan is expected to host a meeting between US and Iranian delegations.

Wide welcome

“The two-week truce has been widely welcomed as an alternative, but given that the first truce has historically often failed, the next phase will be very delicate,” said Achilleas Georgolopoulos, senior market analyst at brokerage firm XM.

In this context, crude oil prices — a crucial element for developing economies — have fallen by about 14% to around $93 a barrel.

Recovery from losses

On the market level, South Korean stocks rose by 6.9%, recovering from losses of nearly 20% last month, while Turkish bank stocks jumped by 10%.

The MSCI Emerging Europe Index also rose by 4.8%, while South Africa’s main index climbed by 6%.

In the currency market, the MSCI Emerging Markets Currency Index rose 0.9% against the US dollar, which came under pressure after demand for it as a safe haven declined.

The month-long dispute had previously prompted investors to turn to the dollar, temporarily halting a year-long downward trend.

The Thai and Philippine currencies each recorded gains of over 1.4%, while the Indian rupee rose by 0.4%, the South African rand by 2.2%, and the Turkish lira rose slightly by 0.1%.

Emerging market assets surged today, driven by a wave of global relief following the agreement between the United States and Iran on a two-week truce, which also includes the reopening of the strategic Strait of Hormuz.

The MSCI Emerging Markets Index rose by 5.1% to record its highest level in a month, heading towards its largest daily gains since November 2022, when the US Federal Reserve hinted at slowing the pace of interest rate hikes.

Wave of Gains

This rise came after the index had declined by about 13% during the previous month, with Asian and European markets reliant on energy imports leading the gains, benefiting from the sharp drop in oil prices.

US President Donald Trump announced this morning the achievement of the truth, just hours before the deadline he had set for Tehran to reopen the shipping corridor, or face what he described as “the obliteration of an entire civilization.”

Pakistan is expected to host a meeting between US and Iranian delegations.

Widespread Welcome

Achilleas Georgoulopoulos, Chief Market Analyst at XM brokerage, stated: “The two-week truce has been widely welcomed considering the alternative, but since the first truce often fails historically, the next phase will be highly sensitive.”

In this context, crude oil prices — a crucial element for the economies of developing countries — dropped by about 14% to around $93 per barrel.

Recovery from Losses

In terms of markets, South Korean stocks rose by 6.9%, recovering from losses of nearly 20% last month, while Turkish bank stocks jumped by 10%.

The MSCI Index for Emerging European Stocks increased by 4.8%, while the main index in South Africa rose by 6%.

In the currency market, the MSCI Index for Emerging Market Currencies rose by 0.9% against the US dollar, which faced pressure after a decline in demand for it as a safe haven.

The ongoing conflict for the past month had previously pushed investors towards the dollar, temporarily halting a year-long downward trend.

The Thai and Philippine currencies recorded gains exceeding 1.4% each, while the Indian rupee rose by 0.4%, the South African rand by 2.2%, and the Turkish lira increased slightly by 0.1%.