Emerging market stocks rebound past pre-war levels on AI optimism; currencies remain weak
Emerging market stocks rebounded on April 20, driven by optimism around artificial intelligence and easing geopolitical tensions. However, emerging market currencies weakened against the US dollar due to its safe-haven appeal and rising oil prices.
Emerging market equities recovered losses triggered by the Iran conflict, supported by gains in Asian markets. The MSCI Emerging Markets Index rose 0.9% on April 20, moving above its pre-conflict level. Equity markets are pricing in a possible peace deal and resilience in technology stocks, driven by the AI wave. In contrast, currency markets remain focused on the dollar's safe-haven appeal and inflationary impact of higher energy prices. Asian markets led the rebound, with South Korea and Taiwan recovering losses. Emerging market currencies weakened, with the South Korean won falling 1.5% against the dollar.
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