Despite escalating geopolitical risks in Europe and the Middle East, robust gains in Asian technology stocks provided a hedge, driving emerging market equities to their longest four-day winning streak since June. Data shows the MSCI Emerging Markets Index rose 0.8%, reaching a four-year high, with Taiwan Semiconductor Manufacturing Company (TSM.US) contributing approximately one-quarter of the gains. The company's shares surged to an all-time high after management reported 34% sales growth in August, highlighting sustained global demand for cutting-edge artificial intelligence (AI) chips.

"Since September, emerging market equities have posted significant gains, primarily driven by optimism in Asian technology sectors, while market expectations for dollar weakness and the Federal Reserve's impending rate cut cycle continue to build," said Nenad Dinic, emerging markets equity strategist at Julius Baer. He added: "Furthermore, uncertainty over U.S. tariff policies has largely concluded, providing support for stable capital inflows."

The emerging markets currency index remained relatively unchanged overall, with the New Taiwan dollar leading gains, while Eastern European assets underperformed. The Polish zloty fell more than 0.5% against the euro after Poland shot down several cross-border drones during Russia's air strikes on neighboring Ukraine, with Warsaw-listed stocks also performing poorly.

"The Polish government's earlier announcement of increased banking sector taxes has already negatively impacted domestic market sentiment, and this drone incident could further exacerbate the pessimistic atmosphere," noted Adnan El-Araby, lead manager of the Barings Emerging Europe, Middle East and Africa Opportunities Fund.

In the Middle East, Israel's strikes this week against Hamas leadership in Qatar drew U.S. criticism and heightened risks of regional conflict escalation. However, market impact was mixed: among emerging market assets, some Israeli dollar bonds were among the worst performers, but the new shekel rebounded against the dollar on Wednesday.

In Southeast Asia, Indonesian assets rallied after newly appointed Finance Minister Purbaya Yudhi Sadewa pledged to keep the fiscal deficit within the statutory limit of 3% of gross domestic product (GDP).