Emerging Markets Register Modest Gains Amid Low Holiday Trading Volumes
Emerging-Market Benchmarks Post Small Gains Amid Holiday-Thinned Trade
Emerging-market benchmarks for stocks and currencies posted small gains in holiday-thinned trade, with most markets in Asia, Europe, and Africa closed for Labour Day. 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. Trading volumes in the gauge's companies were 99.8% lower than their 30-day average.
The currency index rose 0.2%, helped by gains in the South Korean won and Polish zloty. 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.
Earnings estimates for the MSCI index are at a record high, with analysts upgrading their target level for the gauge 12 months from now to a record, implying a 22% gain by April 2027. This optimism is driven by expectations of positive earnings momentum over the next 12 months, which will drive stocks higher.
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
In currency markets, Korea's won rose for a second day, capping a weekly gain. The zloty advanced 0.1% against the euro. Traders focused on cues for the dollar from Japan, where the yen soared after authorities intervened in the foreign-exchange market. Hungary's forint fluctuated between gains and losses, while Romania's leu extended losses to a fifth day amid an escalating political crisis.
| Market | 30-Day Average Trading Volume | Holiday-Thinned Trading Volume |
|---|---|---|
| MSCI Emerging Markets Index | 100% | 0.2% |
| United Arab Emirates | 100% | 0.2% |
Key Figures
- United Arab Emirates: stocks rose 0.2%
- MSCI Emerging Markets Index: rose 0.2%
- South Korean won: gained against the US dollar
- Polish zloty: gained 0.1% against the euro
Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
Investor Takeaway
Investors should remain cautious due to lingering geopolitical risks, but medium-term outlook remains bullish.
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