EMERGING MARKETS-EM FX steady as markets weigh Iran peace deal hopes; South Korean stocks surge

Most emerging market currencies were steady ‌on ​Thursday and Asian stock indexes climbed on AI enthusiasm, while markets awaited more clarity on a potential peace deal between the U.S. and Iran.

MSCI's index tracking global EM stocks surged 2.5 %, recouping some lost ground from the last ‌three sessions, led by South Korea's benchmark KOSPI. The tech-heavy bourse jumped 8.5%, driven by a more than 8.5 % advance in Samsung Electronics as the chip giant signed a deal to avert a workers' strike.

Sentiment was also lifted by AI chip giant Nvidia's upbeat sales forecast, which pointed to persistent AI demand. Taiwanese shares gained over 3 %. In contrast, Indonesian ‌assets underperformed markets, as concerns over Jakarta's spending plans amid energy price pressures from the Middle East conflict weighed.

The rupiah currency was trading at 17,600 per ‌dollar, while stocks fell 3.4 %. The central bank hiked interest rates by an unexpected 50 basis points on Wednesday and the government planned to centralize commodity exports in an effort to help the economy. "Markets are conceding a balance with resilient U.S. growth and AI-driven optimism against rising geopolitical uncertainty, fragmented global growth dynamics and increasingly complicated central bank backdrops," said analysts at LMAX Group.

Meanwhile, Pakistan stepped up diplomatic efforts ⁠to hasten U.S.-Iran ​peace talks, and President Donald Trump suggested ⁠he could wait a few days for "the right answers" from Tehran but was also willing to resume attacks on the country. Oil prices rebounded on the uncertainty, and investors took cues from how economies ⁠are positioned to weather elevated oil prices, and their impact on households and companies.

"Markets are trying to de-trade a US-Iran peace deal... Conviction is lower this time. Rhetoric from both sides ​remains belligerent, and markets are more hesitant to chase optimistic headlines after earlier disappointments," said Francesco Pesole, FX strategist at ING. Reuters reported that all major oil ⁠refineries central Russia have been virtually forced to halt or scale back fuel output following Ukrainian drone attacks, a development that could push Russia to import fuel.

In emerging Europe, stocks in Hungary and Romania gained 0.7% ⁠and ​0.4% respectively, while ones in Poland were flat. Bourses in Turkey and South Africa were off 1% and 0.3% respectively. The latter were pressured by a slight decline in gold prices, among the country's exports.

On the FX front, the MSCI gauge was up 0.3%, with the dollar index little changed. Turkey's lira was little changed, ⁠while South Africa's rand weakened 0.1% against the dollar.

Turkey's parliament passed a law that cuts corporate tax for manufacturing companies, introduces incentives to repatriate assets held abroad and ⁠extends tax advantages for financial services exports, according ⁠to the legislation. Currencies in emerging Europe were mostly subdued, but Hungary's forint depreciated 0.6%, with elevated oil prices weighing.

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For CENTRAL EUROPE ‌market report, see For TURKISH market report, see

For RUSSIAN market report, see

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