BENGALURU: Asian emerging market equities and currencies rose on Tuesday, fuelled by optimism and a revived appetite for risk after Israel and Iran agreed to US President Donald Trump’s ceasefire proposal.
The MSCI’s gauge of Asian emerging market equities climbed 2.6%, rebounding from a 0.8% decline on Monday, while South Korean shares jumped 3% to log their highest close since late-September 2021.
Indonesian equities gained 1.3%. Stocks in Taiwan and Philippines were up 2.1% and 1.4%, each.
Israeli Prime Minister Benjamin Netanyahu said the country agreed to Trump’s ceasefire proposal with Iran after meeting its goal of neutralising Tehran’s nuclear and ballistic missile threat. The Israeli shekel rose 1.5%.
An Iranian official earlier confirmed that Tehran had agreed to a ceasefire but the country’s foreign minister said there would be no cessation of hostilities unless Israel stopped its attacks.
The Israel-Iran ceasefire potentially brings to an end a 12-day conflict that forced millions to flee Tehran and stoked fears of a wider regional escalation, including the blocking of the Strait of Hormuz, a key chokepoint where a third of all seaborne oil and gas supplies go through.
If Iran holds off on blocking the Strait of Hormuz, markets could gradually shift back to risk-on mode, with attention turning to the US trade deal deadline and the upcoming appeals court ruling on Trump’s trade war, said Poon Panichpibool, a market strategist at Krung Thai Bank.
The dollar, which was buoyed by safe-haven demand last week, fell after the ceasefire news, while oil prices tumbled to a more than one-week low.
Oil prices influence regional currencies, since most emerging Asian economies are net oil importers and a rise in prices typically widens their current account deficits.
Comments
Comments are closed for this article.