Emerging Markets Stagnate Amid U.S.-EU Tariff Tensions

Emerging market assets remained flat amid new U.S. tariff threats against the EU, despite record-high stock indices. Geopolitical tensions and potential retaliatory actions from Europe loom large. Meanwhile, emerging markets showed robustness, highlighted by significant equity fund inflows and record trading highs in broader indices.

Emerging market assets held steady on Monday following fresh tariff threats from U.S. President Donald Trump against eight EU members. These threats, intended as leverage in buying Greenland, cast doubt on existing trade agreements, prompting European nations to prepare countermeasures deemed as blackmail.

The MSCI emerging markets stock and currency indices showed little movement, as financial experts noted an increasing political risk premium associated with U.S. assets. This development might push investment funds to adjust their USD positions, potentially impacting the USD and boosting precious metals value.

Despite these geopolitical challenges, emerging markets exhibited resilience. The broad stock index reached record highs, outperforming Wall Street in 2025, as JPMorgan reported significant equity fund inflows. In Central and Eastern Europe, indexes were mixed, with Poland experiencing a 0.7% decline, while Egypt and Turkey saw gains.