EMERGING MARKETS-EM FX steady as Iran peace prospects assessed; Asia stocks surge on AI lift

Investor sentiment was subdued across emerging markets after U.S. President Donald Trump ‌rejected Iran's response to a U.S. peace proposal, stalling progress on talks to end the war. Oil prices surged again, as shipping through the crucial Strait of Hormuz, through which 20% of the world's energy shipments transit, remained choked.

Most emerging market stocks ‌and currencies ​held steady on Monday after gains in the previous week, as progress in U.S.-Iran talks on a peace deal faltered, but Asia's tech-exposed indexes advanced on AI-linked optimism. Investor sentiment was subdued across emerging markets after U.S. President Donald Trump ‌rejected Iran's response to a U.S. peace proposal, stalling progress on talks to end the war.

Oil prices surged again, as shipping through the crucial Strait of Hormuz, through which 20% of the world's energy shipments transit, remained choked. "Given the gaping chasm between the two sides' negotiating positions and deep mutual mistrust, (this) should come as no surprise," said Marc ‌Ostwald, chief economist and global strategist at ADM Investor Services. "As long as the military conflict remains in abeyance ... the fact that they continue to negotiate ... is ‌basically positive, though the risk of a renewed confrontation remains a real one." Most Asian currencies edged lower against the U.S. dollar. South Africa's rand dropped 0.2%, and Turkey's lira was subdued, with MSCI's gauge tracking global EM currencies down 0.1%.

Most currencies in emerging Europe were little changed against the euro, but the Hungarian forint weakened 0.8%, to its lowest level since September 2021. On the flip side, MSCI's ⁠index tracking ​EM stocks hit a record high, lifted largely ⁠by robust gains in Asian equities. Morgan Stanley raised its target to 1,850 for the index for the next 12 months on stronger AI/tech earnings in South Korea and Taiwan. South Korea's Kospi jumped ⁠4.3% to a record high, led by a rally in chipmakers and tech stocks, with SK Hynix surging more than 11%. Equity benchmarks in China gained more than 1% each, hitting their highest level ​in close to 11 years, while ones in Taiwan were up 0.5%. The Chinese yuan strengthened to its highest level since February 2023 against the ⁠dollar, before retreating, after data showed China's export growth gathered pace while factory inflation hit a 45-month high in April. Trump is scheduled to meet Chinese President Xi Jinping on Wednesday, with the agenda including trade, ⁠Iran ​and Russia.

Equities in Poland gained 0.6%, while those in Hungary fell 0.2%. Stocks in Romania surged 1.3% to a record high. The Romanian leu was trading at record lows hit last week after a no-confidence vote toppled the government, putting EU funds and credit ratings at risk. Turkish stocks were flat, while South Africa's slipped 0.5%, ⁠tracking lower gold prices. Meanwhile, Russia and Ukraine accused each other of violating a three-day ceasefire, but Russian President Vladimir Putin said on Saturday that he thought the ⁠war wascoming to an end.

International bonds ⁠in Ukraine gained about 1 cent on the dollar each. HIGHLIGHTS:

** Pakistan to issue first 'Panda bond' next week, finance minister says ** IMF board clears Pakistan to access $1.32 billion ** Egypt gets additional $300 million in World Bank package for war response For TOP NEWS across ‌emerging markets

For CENTRAL EUROPE ‌market report, see For TURKISH market report, see

For RUSSIAN market report, see