(Bloomberg) — Emerging-market benchmarks for stocks and currencies extended climb in holiday-thinned trade as Iran delivered a new proposal to the US via Pakistan while the Strait of Hormuz remains shut.
The MSCI Emerging Markets Index rose 0.2%, with United Arab Emirates stocks, including First Abu Dhabi Bank PJSC and ADNOC Drilling Co. contributing most to the gains. The currency index rose 0.3%, helped by gains in the Hungarian forint and Polish zloty. Oil moved nearly 4% lower on Friday, paring the week’s advance. Most markets in Asia, Latin America, Europe and Africa are closed for Labor holiday.
Emerging-market assets are completing a turbulent week when they repeatedly swung between optimism for an end to the Middle Eastern conflict and concerns over the inflationary impact of oil-price surges. While lingering geopolitical risks have pushed volatility to the highest in more than three years, equity valuations and carry trades are keeping many investors bullish over the medium-term outlook.
“Tensions in the Middle East could escalate again in the near term, but the hit to global economic growth is likely to be contained,” Cassidy Ainsworth-Grace, a macro strategist at Oxford Economics, wrote in a note. “EM earnings momentum will remain positive over the next 12 months, driving stocks higher.”
With earnings estimates for the MSCI index at a record high, analysts have also upgraded their target level for the gauge 12 months from now to a record, implying a 22% gain by April 2027.
In currency markets, the forint gained 0.2% against the euro and zloty advanced 0.1%. Traders focused on cues for the dollar from Japan, where the yen soared after authorities intervened in the foreign-exchange market.
Hungary has released previously undisclosed details of a €1 billion ($1.2 billion) loan that outgoing Prime Minister Viktor Orban’s government took from China in 2024, news website 444.hu reported Friday.
Barclays strategists recommend closing long positions in the lira as the rise in oil prices threatens to widen Turkey’s current account deficit and undermine the currency’s outlook.
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