Emerging Assets Pare Gains as Iran Rebuffs Ceasefire ProposalAI Quick Read(Bloomberg) -- Emerging-market assets trimmed gains after a report that Iran has rebuffed a ceasefire proposal dented hopes for a quick resolution to the war in the Middle East.
MSCI’s index tracking currencies in the developing world was up 0.3%, off its highs from earlier in the session. Hungary’s forint and Peru’s sol were among the best performers. A sister gauge of EM stocks climbed 0.6%, from as much as 0.8% earlier. Some markets remained closed on Monday for a holiday, including China, London, Hong Kong and Australia.
“There seems to be a lot of back and forth and people are not quite sure how this will play out,” said Dan Pan, an economist at Standard Chartered Bank in New York. “Thin liquidity as people slowly come back from the long weekend also added on the lack of conviction across the market.”
Sentiment had gotten a boost earlier as Axios reported that the US, Iran and a group of regional mediators were discussing the terms for a potential 45-day ceasefire that could lead to a permanent end to the war.
The rejection of the deal, reported by Iran’s state-run IRNA and delivered through mediator Pakistan, is the latest blow to efforts to end the month-long war that has triggered a global energy crisis and has traders worrying about the paths for growth, inflation and interest rates across the world.
Trump, who is set to speak at a press conference at 1 p.m. New York time, says Tuesday is the final deadline for Iran to make a deal.
Meanwhile, US data showed that prices paid for services and materials jumped to their highest level since October 2022. Businesses are experiencing a sharp run-up in cost pressures for energy and other inputs due to the Iran war.
Pakistan’s economy is facing a new setback after it failed to reach agreement with the United Arab Emirates to roll over $3 billion in debt for the first time in seven years. The loan amounts to about 18% of Pakistan’s foreign exchange reserves, putting significant pressure on the country’s external buffers and threatening the currency at a time when high crude prices are draining its coffers.
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