Emerging market equities recorded their best monthly performance since 2022, driven by significant gains in Asian technology stocks fueled by optimistic artificial intelligence demand prospects. This occurred despite ongoing oil supply disruptions amid tensions between the U.S. and Iran near the Strait of Hormuz.

The MSCI Emerging Markets Index rose 14.5% in April, recovering losses incurred following the outbreak of conflict. According to Malcolm Dorson, Senior Portfolio Manager at Global X Management, the rally "appears to be more than just a short-covering rebound," adding that "we still see further upside potential."

Despite the recent surge, emerging market stocks remain cheaper relative to U.S. equities. Analysts have raised earnings expectations for emerging market companies by 30% this year, a significantly larger upward revision compared to the roughly 10% average increase for the S&P 500.

Risk sentiment was mixed on Thursday, with emerging market equities declining 1.1% while most currencies strengthened against the U.S. dollar. Although oil prices retreated from four-year highs, they remained above $110 per barrel as concerns persisted that tensions with Iran could escalate.