Following a ceasefire agreement between the United States and Iran, oil prices plummeted, leading to a rebound in risk appetite and a subsequent rise in emerging market assets. On Wednesday, the MSCI Emerging Markets stock index climbed 4.3%, while its corresponding currency index increased by 0.8%. The price of Brent crude oil fell by as much as 16% to $91.70 per barrel. Bond prices also advanced. The strong rally in emerging market assets is part of a broader global market upswing fueled by the temporary US-Iran ceasefire agreement, which is expected to facilitate the reopening of the Strait of Hormuz. The sharp decline in oil prices has also revived hopes that the Federal Reserve might resume interest rate cuts later this year. Brendan McKenna, an economist and strategist at Wells Fargo focusing on emerging markets, stated, "Recently underperforming high-beta assets are likely to benefit from this," including those of South Africa, Chile, and most emerging Asian oil importers—particularly Indonesia and South Korea. "This is positive news for emerging markets for now, but if negotiations fail to make progress, geopolitical risk premiums could quickly be repriced into emerging market assets," he added. In Asia, currencies of net oil importers such as the South Korean won, the Thai baht, and the Philippine peso led gains against the US dollar. The South African rand appreciated by up to 2.4% against the dollar, and the Mexican peso also rose by as much as 1.2%. Kerry Craig, a global market strategist at J.P. Morgan Asset Management, commented, "The real test will be what level oil prices ultimately stabilize at as talks continue. Current prices are not high enough to destroy demand but may sustain a certain risk premium and remain well above levels seen at the start of the year." In fixed income markets, the yield on India's benchmark 10-year government bond fell by 13 basis points, its largest drop since 2022, to 6.91%. The yield on Indonesia's 10-year bond decreased by 6 basis points, and the yield on South Korea's 10-year bond declined by 12 basis points to 3.64%.