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. According to reports from Bloomberg, the MSCI Emerging Markets Index rose 0.2%, while the currency index also gained 0.2%, helped by advances in the South Korean won and Polish zloty. Asian stock markets tracked Wall Street higher following a tech-led record day on the US markets, with investors awaiting the next move in the Middle East crisis. Tokyo, Sydney and Wellington were all up, while London opened lower and Paris and Frankfurt were also closed.
Despite the modest gains, trading volumes in the gauge's companies were significantly reduced, with trading volumes 99.8% lower than their 30-day average. As reported by Bloomberg, United Arab Emirates stocks, including First Abu Dhabi Bank PJSC and ADNOC Drilling Co., contributed most to the gains in the equity markets. The reduced trading activity reflects the holiday-thinned market conditions across global emerging markets.
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. With peace talks between the United States and Iran stalled for the past week, there appears to be little sign that they will agree a deal to reopen the Strait of Hormuz any time soon, choking off a fifth of the world's oil and gas supplies. According to Bloomberg, 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. The United States is seeking to assemble an international coalition of allied states and shipping firms to coordinate safe passage through Hormuz while maintaining its blockade of ships serving Iran.
Oil prices edged up Friday after the previous day's wild swings, with investors awaiting the next move in the Middle East crisis. Brent North Sea Crude rose 1.3% to $111.85 per barrel, while West Texas Intermediate increased 0.8% to $105.90 per barrel. The geopolitical tensions continue to influence oil markets as there appears to be little sign of a resolution to the Strait of Hormuz situation, which could significantly impact global energy supplies. After tumbling early in April on news of a ceasefire between the rivals, crude has spiked in recent weeks amid stuttering negotiations, with Brent hitting a peak above $126 before easing back to end at $114. International Energy Agency chief Fatih Birol warned the world faced a "major energy and economic challenge" as oil prices soar, while UN chief Antonio Guterres said the closure of Hormuz was "strangling the global economy."
Tech stocks led the Wall Street rally with the S&P 500 and Nasdaq once again ending at record highs thanks to strong earnings and economic data. Google parent Alphabet soared 10% after posting forecast-topping profits and solid revenue across its major divisions on Wednesday. After the market close on Thursday, Apple said earnings beat expectations thanks to strong iPhone demand. As reported by Pepperstone's Michael Brown, "The market firmly bought into Wednesday's solid earnings story from the hyperscalers, with risk appetite also backstopped by the broader path on the geopolitical front continuing to lead towards de-escalation." The US Commerce Department estimated the world's biggest economy grew by an annual rate of 2.0% in the first three months of this year, with a key factor being a surge in artificial intelligence investments, although consumer spending cooled.
