Emerging market equities recorded their fourth consecutive weekly decline as investors continued to pull back from artificial intelligence-related positions, while rising oil prices intensified inflation concerns and further dampened risk appetite.
The MSCI Emerging Markets Index fell as much as 0.8% to 1,562.47 points, touching a three-month low and extending Thursday's 2.5% drop. The index is on track for its longest weekly losing streak in seven months.
Shaun Lim, a foreign exchange strategist at Maybank, said risk assets are currently being driven by two main factors: weakening sentiment in the AI sector and rising oil prices. The two do not necessarily move in tandem, but their combined effect amplifies market volatility.
Brent crude traded near $114 per barrel on Friday, posting a weekly gain of nearly 4%. Lim commented: "Rising oil prices combined with AI sector panic represent a terrible combination for risk assets." He also noted that the market will next focus on the Federal Reserve's policy decision next week and upcoming U.S. data, particularly the PCE inflation report.
On Friday, Indonesian stocks bucked the trend, with the Jakarta Composite Index rising 1% as the energy sector advanced and sovereign wealth fund Danantara's indication this week that it was buying domestic shares boosted market sentiment.
Emerging market currencies were broadly flat, with the MSCI Emerging Markets Currency Index holding steady at 1,930.08 points. The Philippine peso stood out among Asian currencies after the country's central bank raised interest rates by 50 basis points on Thursday, exceeding expectations, and signaled further tightening ahead.
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