Emerging Markets Sway as US-Ukraine Minerals Deal Ignites Bonds

Emerging market stocks and currencies retreated slightly amid low trading due to holidays, while Ukraine's dollar bonds surged following a minerals agreement with the US. Optimism lingered as the US pursued trade deals, despite continued uncertainties. The IMF downgraded growth forecasts for the Middle East and North Africa amid trade war fears.

Emerging market stocks and foreign exchange markets experienced a slight decline from recent highs on Thursday, influenced by limited trading volumes due to holiday schedules. However, Ukraine's dollar-denominated bonds saw significant gains following a newly signed minerals agreement between Kyiv and Washington.

The deal, heavily pursued by U.S. President Donald Trump, grants the United States preferential access to Ukrainian minerals and sets up a joint investment fund for Ukraine's reconstruction efforts. This move comes amid ongoing attempts to secure a peace settlement in Ukraine's conflict with Russia.

Meanwhile, the International Monetary Fund adjusted its growth forecast for the Middle East and North Africa to 2.6%, attributing the downgrade to uncertainties from global trade tensions and fluctuating oil prices. Russia also revised its 2025 budget deficit estimate in anticipation of prolonged lower oil prices.

(With inputs from agencies.)