Emerging-Market Assets Rise as Iran Delivers New Proposal

In holiday-thinned trade, emerging-market benchmarks for stocks and currencies continued their climb 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.

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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.

Analysts have upgraded their target level for the MSCI index 12 months from now to a record, implying a 22% gain by April 2027. Earnings estimates for the index are at a record high. With earnings momentum expected to remain positive over the next 12 months, driving stocks higher, investors are optimistic about the medium-term outlook.

In currency markets, the Hungarian forint gained 0.2% against the euro, and the Polish 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.