Emerging-market assets rose as investors responded to lower oil prices, stronger risk appetite and continued demand for technology-related stocks. This reflected a more supportive backdrop for developing markets, where energy costs, currency stability and global growth expectations can quickly influence capital flows.
Oil prices fell as hopes increased that a US-Iran agreement could reduce disruption risk around the Strait of Hormuz. That matters for investors because the strait is a key route for global oil shipments. Any sign of reduced pressure in that area can ease inflation concerns and support countries that are sensitive to imported energy costs. Lower oil also gives investors more room to consider emerging-market currencies, bonds and equities without the same level of concern over a near-term energy shock.
Emerging-market currencies strengthened alongside equities. The Indian rupee was one of the better performers after comments from the central bank suggested it may be undervalued. Thailand’s baht also gained. Investors becoming more willing to add exposure to selected developing markets. Stronger currencies can also reduce pressure on inflation and improve the outlook for local assets.
Stocks extended their gains in the next session as the artificial intelligence theme continued to support technology-linked markets. Investors remained focused on companies and economies connected to semiconductors, hardware, cloud infrastructure and other parts of the AI supply chain. This helped offset some concerns that the Iran situation could still create fresh uncertainty.
Emerging markets are benefiting from two supports at the same time. Lower oil prices are reducing one major risk, while AI-related demand is giving equity investors a growth theme to follow.
Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.
